Dropbox (DBX) stock is rising today after the company announced plans for layoffs. In a blog post published this morning, CEO Drew Houston stated that Dropbox will be reducing its global workforce by 20%, amounting to roughly 528 employees. He cited the company’s need to restructure as part of a necessary transition as the reason for these job cuts.
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This decision has not impacted share prices yet and DBX stock is currently on an upward trajectory.
What’s Happening with Dropbox Stock Today?
As of this writing, DBX stock is up 3% for the day after a week of little momentum and slight declines. This indicates that the market is reacting well to news of the Dropbox layoffs. Despite last week’s dip, the stock has performed well over the past three months, rising 11% and shaking off any volatility.
How layoffs impact a company can vary depending on the reasons for them and how the employer plans to proceed. In the blog post, Houston discussed Dropbox’s plan for growth, stating, “The steps we’re taking today are necessary to both strengthen our core product and accelerate the growth of our new products.”
While he noted that “softening demand and macro headwinds” have impacted Dropbox’s core business, Houston stressed that these job cuts are part of a strategic restructuring initiative. The fact that DBX stock is rising today suggests that the layoffs aren’t likely to impact share prices in either the short or long term.
Is Dropbox Stock a Buy, Sell or Hold?
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 1.5% in its share price over the past year, the average DBX price target of $27.20 per share implies 2.6% upside potential.
