Another mass layoff hit today as cloud services stock Dropbox (DBX) joined the cataclysm of tech sector layoffs. Dropbox showed the door to around one in five of its workforce worldwide, and shareholders were all in favor. Dropbox shares rose almost 3% in Wednesday afternoon’s trading. That’s right, one in five; Dropbox showed the door to over 500 of its employees in one swoop, cutting parts of the business that were, according to CNBC, “over-invested or underperforming.”
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The plan is to restructure Dropbox to improve efficiency by cutting back on the number of things it is doing at any one time to try and focus on the things it does best, which is hard not to go with.But this is not the first time that Dropbox has made cutbacks; back in April 2023, it let go of another 500 staff members, which at the time represented 16% of its global workforce.
A note from CEO Drew Houston also pointed out a reason for the cuts, “We’ve heard from many of you that our organizational structure has become overly complex, with excess layers of management slowing us down.” Somehow, I doubt that Dropbox was carrying 500 extra pointy-haired bosses, but a move in that direction might be helpful.
An AI Focus
One of the things that Dropbox will be putting its attention to, of course, is artificial intelligence (AI), and Houston offered up some insights on where AI will prove the most useful. This came not long after Dropbox released “Dash for Business,” which is an AI tool designed to augment several key business functions, including content management.
Houston was looking for AI to have an impact in some unexpected places, including music and archaeology. He also believes that the biggest impact of AI is “intersection,” which is, basically, developing highly specialized AI applications for specific fields, as it allows developers to “…figure out how to apply the technologies to make a bunch of things in your field better.”
Is Dropbox Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on DBX stock based on three Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 1% rally in its share price over the past year, the average DBX price target of $27.20 per share implies 2.56% upside potential.
