There's still a lot of pessimism surrounding outperforming DBX
Every day for the next three weeks, we're going to highlight one of Schaeffer's top 12 picks for 2024. First up, we have software stock Dropbox Inc (NASDAQ:DBX). To access the entirety of the 2023 report, click here.
Software stock Dropbox (DBX) is knocking at the $10 billion valuation plateau around $29 for the sixth time in the last six months. The company -- which has begun collaborating with semiconductor stalwart NVIDIA (NVDA) -- reported a top-line beat for the third quarter that also included an upwardly-revised fiscal year revenue outlook. On the charts, DBX boast's a 23% 12-month gain that easily outflanks the SPDR S&P 500 ETF Trust's (SPY) year-over-year return of 18%. The shares are breaking through a downtrend on the monthly/weekly timeframes, with recent consolidation coming on the bull side of this trendline.
Despite the outperformance, six of the 11 brokerages in coverage maintain "hold" or "sell" ratings. Short interest, meanwhile, is up 50% year-to-date even as DBX rallied, underscoring technical strength. And with 7.6% of the stock's total available float still sold short, there's ample room for a short squeeze to keep tailwinds blowing.
In the options pits, Dropbox stock's Schaeffer's put/call open interest ratio (SOIR) ranks in the 78th percentile of the past 12 months, while four of the top five OI positions are puts. With puts outnumbering calls using all expiries, an unwinding of this pessimism could push DBX higher in 2024.