prevag. enthe name to remember. good morning, it's 8:00 a.m. at dropbox headquarters in san francisco, 11:00 a.m. at the nasdaq where we are awaiting the stock to open in its first trade. "squawk alley" is live ♪ hey, you, get off of my cloud hey, you, ♪ ♪ get off of my cloud, hey, you

get off of my cloud ♪ ♪ don't hang around ♪ the telephone is ringing i sa hi, wait to see who's ♪ ♪ on the line good friday morning, welcome to "squawk alley." i'm here with michael santoli. deirdre is at the nasdaq covering dropbox's market debut and she's sitting down with see you drew houston in a couple minutes. let's get to bertha coombs who has news this hour bert bertha >> we have dropbox set to open, it could be another few minutes yet. goldman sachs, the lead underwriter, matching up the trades right now after pricing above the range of $21 a share, the indication for the opening trade somewhere in the range of maybe $27, $28 per share which would be a good 33% top above where

they price as you can see, very busy here, the nasdaq has ramped up its ipos, becomes an event on the top floor so we'll watch for that opening trade and bring it to you as soon as it happens. >> the dow is hovering above the drop that's coming off its worst day since february 8 trade fears, fed tightening, much more weighing on investors. joining us now on the cnbc newsline is tom lee. good morning to you and what are your takeaways from the volatility we've seen lately >> i think this is definitely showing it's a liquidity there have been things that have reduced market liquidity tariffs have caused investors to stay on the sidelines,

repatriation is causing paper markets to seize up because money is coming back to the u.s. but i see these as temporary liquidity shocks and i think fundamentals remain intact so as much as it sounds painful i would want to buy this. >> so, tom, is it as painful as it's going to get right now? we were looking yesterday at the velocity of the losses yesterday but it seemed like a lower intensity selloff than we saw early in february. do you want to get cute in terms of what levels make sense tactically or what sectors you think might lead us out of this? >> great question. we've noticed volume in this downturn is much lower than it was in the two prior corrections this year and the vix hasn't jumped as much so because there'sle less liquidity, it doesn't take much to undercut the lows from earlier this year.

i think we should be bottoming within the next few days i'm not great with tactical short term but to me with leading indicators as strong as they are and u.s. fundamentals good and the fact that bonds will be tough to own, i think people will come back to equities and large institutions on the sidelines will come back in before the end of the year. >> tom, the concern lately, is it about tariffs is it about what may happen with the u.s. and china and elsewhere on trade is it anything about a government shutdown this morning? it looks like markets are shaking that off even if it were to become more of a possibility. >> well it's all of the above. i think there's been a whole constellation of things that are scary because it's reducing visibility like tariffs and trade wars it's not the kind of environment institutions want to put equities -- money into equities

but unless our policies are not geared to help businesses -- and they are -- i don't think the extent of what we do on trade will be damaging to corporate profits which means stocks start to realize that. >> tom, we've lost a little leadership from the big tech growth stocks, banks under pressure for those reasons you cited with these liquidity bottle nexts we're having. how much does it matter those two groups do work on the upside if we're going to see our way to not go into those lows again >> i think the large caps, especially faangs, there is an issue of trust with their customers but to me that's striking me more as a temporary shock because at the end of the day these are incredibly smart businesses and they do actually -- they do their job for consumers really well so i think the faang stocks, especially facebook, will recover and then from a larger

sector perspective we think the bet you need to make is interest rates are rising because inflation is being generated this means you still have to make this large rotation into value. >> tom, thanks for joining us. >> great, thanks for having me. >> tom lee of funds strtrat let's bring in our next guests thank you for joining us. >> thank you for having us. >> i heard you on the phone earlier, boil it down, what do you think is going on? >> there's several things. mike knows because we chat on occasion i've been focused on the funding markets and short rates, we've talk about it as well. that was going to be the catalyst for more volatility in equity market this is year. >> so just to make sure i'm following, you're saying the fact -- and we talked about this with jim grant if rates are -- and costs are going up in the funding market, you see this as a sign of

stress >> it's not necessarily stress in the system. it's more about what the impact of higher funding cost is to companies. if you think especially about small cap companies, they rely typically more often on bank funding than what a large cap company that can term out its debt through capital markets by issuing long-term bonds, for example so the reason for that stress is interesting as well. while i do not think it's anything systematically wrong with the financial system it's about what we're seeing in fiscal policy about burgeoning deficits t-bill options have been sloppy of late. that's why i think the situation is a little less temporary than perhaps tom lee does it's not just about repatriation it's about the need to issue more paper on the short end of the u.s. treasury curve which is increasing funding cost which is has real affect on company cash flows and earnings. >> alex, is it anything more than indigestion the bank stocks are acting

poorly, at least in the last couple days. today they're down again in a relatively stronger take. >> for us it's more focusing on what is happening on the monetary policy side i know they've been focused on aspects like trade but the underlying trend if 2018 is the dismantling of the safety net that has been global central bank support for the last eight, nine years, central banks have been the backstop helping markets when there's a drawdown in the drawdown in february, central bankers around the world were eerily quiet and investors are getting used to a world where, hang on, central banks aren't going to ride to the rescue anymore that's pressure that will get harder through 2019 and the ecb and bank of japan begin to taper their programs and that's where we see the monetary policy withdrawal adding to higher volatility within risk assets over the next 12 to 18 months. >> it was interesting to see names like pat picaterpillar an

boeing is it right for people to trade these names as a proxy for their worst case fears about trade >> i don't think they should be proxies for trade and i agree with alex in that monetary policy and the rates market remain the most important thing. to me, though, trade is very important because there's so much growth priced into risk assets from a global standpoint. the risk is that if we have a trade war, the growth we've been getting out of emerging markets, which are about 65% of global growth right now, could be impacted if that starts to happen then i think those fears are justified. that said, where we are with the markets, i'm more of a buyer than a seller. albeit, i don't think we've washed out i think the low volumes you were talking about with tom are something to be concerned about because i'd like to see a high-volume low which we haven't seen. >> get more of a flush out

there. alex, you spoke as if the central bank policy is a given earlier steve liesman was saying that prospect of a fed rate hike was priced out yesterday you had one tough day in the markets and we went to just two more now that can always change but you have the european macro data also softening up a lot. might there be more give and take between the markets and central banks? >> i think there will be more give-and-take. it's fairly set in stone the pathway for the federal reserve. i know what they're doing with the balance sheet. there's a good idea you'll get probably three to four rate hikes, including one we've already had. that for me is a given the question marks sits over the ecb and the bank of japan. i'm looking to the april ecb meeting to get some clarity over that and that's where the push-and-pull might come regardless we're talking where the direction of travel is set the magnitude is up for debate and investors are waking up to

the idea. >> the training wheels are off the dow hanging on the a gain. let's get back to dropbox which is expected to open any moment deirdre is at the nasdaq. >> we're getting early indications showing dropbox will trade between 27 and $28 if that does hold it will represent a 30% pop for the stock on its debut that can change. it would be a nice start for the biggest ipo since snap last year it's a price above its expected range. there's drew houston, ceo and co-founder of dropbox awaiting that first trade and of course a lot of folks stand to make money from this ipo even though it is listing, set to list in terms of market cap below its latest private valuation in 2014, guys.

>> although it's getting closer. >> was i pronouncing that correctly? >> not like the little town in texas. >> i always assumed pronounced that way is wrong but it's not. >> we'll keep an eye out there we were talking to an analyst who had an initiation on the stock with a $22 price target. we'll keep an eye on how that opens. meanwhile, sheryl sandberg apologizing for the massive data scandal in an interview with julia yesterday. >> sheryl sandberg saying the company will do what it takes to protect users and earn back trust. they say even if that's massively ramping up higher and investing more in artificial intelligence and machine learning to protect the

platform this as the company struggles with the fundamental challenges of being a big open platform. >> we have a big platform. we have billions of people who use the service and that means there are always going to be people trying to do bad and it means we're going to have to v to -- have to react quickly. there's good that can be done. it depends on trust and upon us earning it so at this critical moment we know that we need to establish trust. we're not going to say that we are not going to have issues we know that there will always be bad actors on our platform. but we are going to work as quickly as we can to prevent those problems, to disclose those problems and prevent anything going forward. >> sandberg saying she and mark zuckerberg take their responsibility seriously and they're working to disclose far more to their users, both about their data and how it's shared and the ads they're seeing. >> we are taking very aggressive steps, making things much more transparent.

we already have a tool live in canada that will show people every ad that's running from any page when that tool goes up, you'll find bad ads, that's the point the transparnes of the tool will enable us to find the bad actors and kick them off the platform. >> this comes as sheryl sandberg hits her ten-year anniversary at facebook under her leadership the company has grown from 300 million dollars in revenue to over $40 billion in revenue from 145 million users to 2.1 billion on the platform every month and the company's employee base has grown from 850 to 25,000 employees with more hiring in the works. she and zuckerberg have transferred the company to being truly mobile when sandberg started, 0% of the revenue was from mobile. now that number is 89% guys, back to you. >> julia, thank you. facebook shares looking still at a decline.

>> slight decline, looks like selling is down. by the way, i can't believe she's been there ten years that was four years before the ipo. amazing. >> and the shares still down about 10% this week. we have a big show ahead we will sit down with dropbox ceo drew houston on a cnbc interview. it's the biggest ipo since snap went public. we have you covered. dow nghaing on to a 78-point dow nghaing on to a 78-point 12-out-of-10, would recommend u, thing. because if you only want the best thing, you get the #1 thing. directv is rated #1 in customer satisfaction over cable. switch now and get a $200 reward card. more for your thing. that's our thing. call 1.800.directv we're all under one roof now. congratulations. thank you. how many kids?

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bertha coombs is on the floor, bertha, you're watching this very closely. it should be interesting we keep talking about the $10 billion valuation that dropbox got in the private markets >> you can look and see deena freedman has joined drew houston and the rest of the team there as they are watching the trades being matched. this is is nasdaq's 30th ipo what what makes this even rarer is not that they are just the large nest silicon valley going public but the fact that it's only the fifth tech ipo this year most of the ipos have been in health care and in finance the number of the tech ipos that

did go public over the last nine months have gone very well z scaler last week priced well above the range, still trading above its ipo price despite what has been a tough week for tech it's down on the week along with the rest of the tech names, but that cloud player came forward, has a market cap right now of about $3.5 billion ipo for dropbox, it's going to put its valuation somewhere in the range of $9 billion so that will make it the largest tech ipo we've seen so far today. back over to you >> all right, bertha, thank you. you'll keep us posted there. staying within tech, micron right now, shares backing off a little bit following the company's earnings last night. the company reporting second-quarter results that beat estimates. those results bolstered by large demand for memory chips. that's micron's bread and butter the stock up more than 30% year to date. the ceo of micron joins us now to talk about the business

sanjay, thanks for joining us, good to see you. >> good to be on the show, thank you for having me here >> so the market here reacting just with a slight step back in your stock put the quarter in context a little bit i know if there are some areas of hesitation in terms of commentary, there may be some concerns about chip pricing going ahead and then your capital spending but put the context in the longer term story for the memory business. >> it was a great quarter for us it was a record. we had report profits, record free cash flow generation, free cash flow of $2.2 billion during the quarter so by all measures an excellent quarter in terms of financial performance. our growth is coming from a need for fast memory as well as fast storage and applications such as data centers, such as your smartphones.

in data centers, the trends of artificial intelligence are driving the need for more and more fast memory in order for data centers to provide new business value propositions to the customer in the same way hard drives are being replaced by flash ssds, our sales in ssds to our enterprise and cloud customers tripled on a year-over-year basis and overall ssd sales increased 80% on a year-over-year basis so micron is really executing very well on our key priorities of cost competitiveness and moving our portfolio to high-value solutions we provided a strong guidance for the current quarter as well. >> and part of the guidance as well looking out a bit was somewhat higher or capital spending at the higher end of the range. clearly that's a bet on a continuing strong demand picture

for those end markets but should investors be concerned about higher capital intensity of the business and is it your bet that this is less cyclical? >> the capital spending has been targeted toward technology transitions. we're making progress in our memory side as well as on the fast storage side, the flash side so we are investing in in the builting clean room space iniie to new technology nodes so we can continue to grow our business profitably. we are extremely focused on discipline cap x management and we are not increasing any production, we are using our existing capacity to go toward the new technology nodes, to continue to bring our innovation

and to bring our high value solution solutions. >> as the u.s. wants to make sure it's protected from china and make sure that we have our national champions, especially the qualcomm and broadcom deal comes to mind, does that affect anything in your business? does this raise concerns for you and your production going forward? >> at this point we do not see any impact to our business i think what's important to understand is that memory and storage is key to all the massive trends you see in data center, in smoebs with the experience you have with high resolution cameras and videos as well as inclined computing, automotive, autonomous vehicles, multitude of markets, verse diversified markets that have need for fast memory and storage

and micron is the only company in the western helmisphere that can provide these. the need for our products are global, well whether in china or any other parts of the world the customers need our products and we are eager to bring our innovation to those customers across the globe and continue to grow our business and looking at partnering with the customers in growing our business over time we are focused on making sure our intellectual property is respected across the globe because that's important that there is fear and same set of rules that are followed by oil companies and all governments across the globe and so our intellectual property has come from 40 years of innovation at micron with billions of dollars invested in r&d. very proud of how it's fuelling our future growth as well. >> sanjay, thank you very much for your take on the quarter and those issues

thank you. >> thank you. >> ssds, by the way, solid state drives >> solid state drives. >> just because i had to do a stutter step a little bit. >> and nand and d-ram. that's what i need to know. >> the stock is still up 100% on a 12 h-month basis it's always about where we are in the cycle. >> and the length of what's happening in the my crone cycle speaks to what's happening in the broader rally, the economic expansion, we go to september it's the longest one let's get up to deirdre at the nasdaq to have another glimpse for dropbox. >> that's right, a big day here and we are seeing that dropbox is indicated to open at $28.25, that would represent a very big pop and you are hearing the. [ cheers ] ing from early investors, founders, executives right behind the camera here

you will hear from the ceo and co-founder drew houston on cnbc as the company he founded makes its debut. his bitmoji on twitter getting in on the action but it's indicated to open any minute now at $28.25 it would represent a huge pop. we'll get more on that shortly more on "squawk alley" as we return sorry, we are going to get to bertha because it's seconds away from opening. >> that's right, they are seconds away from opening. they have been giving the few opening remarks. it's looking like perhaps maybe $28.50 this is an ipo that has been oversubscribed, this market has been starved for a tech ipo and given the fact that we've got to take this week for tech that has been fairly rocky to say the

least, it is a robust demand that you're seeing today with the open this morning they will have a valuation somewhere north of $9 billion. this is a company that is 11 years old. as you mentioned, they have about a billion dollars in revenue. although in the past year did post a loss of more than $100 million. $500 million users globally and about 10 million of those are the ones that are paying and pay the majority of those revenues, a lot of them corporate users. cloud storage and cloud file sharing is very important when it comes to business and collaboration. they have competition but dropbox certainly is a well-known name since they are a long time player coming from silicone valley. folks will be watching very carefully. trade not just here, guys, but as well in silicon valley you have a number of unicorns.

a successful tech ipo may well give them more enthusiasm to do that kelly? >> we were just talking about the fact -- and bob is here as well bob, you've been through so many of these ipos. >> oh, boy. >> the interesting thing about dropbox is not only did they come at a time when the tech ipos came out of favor it looked like it was going to price below that $10 billion raise but now not only did the demand come in better, the price looks like it's about to pop this could be a big deal for the pipeli pipeline. >> remember, z-scaler, a cyber security but also in the general tech space, they did exceptionally well there's a lot of demand for cyber security, that was there, there's demand in anything for the cloud space. i'm a user of dropbox for many, many years one of the reasons they have a sticky following is stuff works. so in dropbox you can drop a lot

of bizarre file extensions there's hundreds of them out there. >> what kind of bizarre file extensions >> let's not get into that the important thing is you can throw it at dropbox and it works. other companies that do storage, they won't necessarily work for you. this really works. >> and you pay for the service, bob? this goes back to the business model. >> i have been a loyal follower of dropbox, it's a small group of companies i believe in because it does what it says it's going to do and it works. that's what i care about i'm an apple user, an amazon user, these are companies that work and they fill a utility we had a pretty good ipo quarter, by the way, 36 ipos this quarter for the first quarter that's higher than expected, about $12 billion so that's a good sign. we're going to get a couple interesting ones out there the chinese ipos are going to be thick and heavy. next week ichii comes. >> the netflix of -- >> yes, they're basically the netflix of china

they do online video streaming they're coming next week that will be a big valuation there's another one that does cloud-based subscription revenue and billing. all these companies that are out there that want to do cloud-based subscriptions, they basically manage it for you. that will be the next couple weeks. >> let's bring into the conversation byron dieter who led investment in cloud ipos, including box and twilio byron, glad you could join us as we wait for dropbox to officially open. >> thank you for having me they're going to open around the $12 billion mark which values them highly and deservedly so. >> is that a big deal for venture capitalists who looked and said dropbox is going to go public, it's a down round so to speak and now going wait a minute, maybe it's showing us

the demand hang on, let's bring bertha coombs back in. >> giving you the indicative price. it's $28.75. clearly strong demand here they are taking their time to make sure they get the best price they can goldman sachs the lead underwriter very much in control although we are watching it here normally these ipos open around 10:4r5 the fact that you're seeing such strong demand is part of the reason why it's taking so long to bring this open. >> it keeps reaping higher now with the indicative price around 29 bucks. >> 29 bucks so it took two hours to open. obviously a pretty good pop surmounting the $10 billion valuatio valuation. >> i'm using fully diluted

shares which is what is usually used so i had 9.2 billion at $21. so at 28 -- >> 30% higher. >> you're dealing with $12 billion almost at this point. >> byron, what were you going to say about the significance of that >> well, so when you include delusion from the prior financing, $29 coincidentally is right about the mark that blackrock bought in in 2014 so it's an important milestone, talk of this down ipo, obviously for founders and investors it's fantastic at $21 a share but at $29 there's a meaningful milestone where it gets it back to the break even point and we may be dancing right at the mark where we'll see an up ultimate pricing even with that historical mark. >> deirderirdre is at the nasda >> cloud has been such a hot space over the last year handedly beating the nasdaq over the last year so should we take

dropbox as a sign of what other aging unicorns could take as a sign of their ipo? uber, airbnb, lyft, how closely are they watching this and how closely should we correlate their plans to go public this very strong demand we're seeing for dropbox. >> the recent ipos, the z-scaler ipo, the performance of those spectacular cloud companies, you marry it with this backlog of super high quality unicorn private cloud companies, i think this is an open for business sign those companies will look at this, understand the market demand is there, that the bye side interest is strong and across the spectrum from consumer to enterprise including this subset within cloud, the pricing is coming back the market demand is high and i expect we're going to see a strong backlog building of shadow ipos in the coming quarters. >> byron, let's get back to

bertha coombs on the floor up with drew houston. what are we seeing >> it looks like the indicative price here, about $29 a share. one of the winners today, not just the folks in dropbox but sal salesforce.com which had a $100 million plus placement ahead of the ipo, they have a nice stake in the company and one of the winners coming here today. salesforce a major cloud player. when you look at some of the tech ipos that have come forward that are still doing very well following their ipo a lot of them are ones that have business models that involve sort of dealing with tech and storage but some of the kind of entertainment ones that have rocketed well among the best performers here from the nasdaq has been roku. snap is trading below its ipo price, that was one of the big headline grabbers last year but roku very quietly continues to move higher even as we all

wonder about what is happening in the streaming space so we're getting closer here still not quite there as the underwriters look to try to get the best price on this ipo >> hey, bob, what's taken so long >> well, this is not easy to price this first off, there's tremendous amount of retail interest here so you have a lot of people going back and forth and down on the floor here what happens in the situation is you've got people waiting at the last minute to figure out where we are so you don't want to get in too early to throw the cards in so suddenly people are looking at $29 and now they're trying to figure out how to squeeze frankly because the last blood out of the stone remember, that's the purpose of it here we go. >> bertha, we have an open. >> opening trade. >> $29

>> the opening trade was $29 but there's still follow on interest here [ cheers and applause and that pretty much says it all. very successful ipo. a 40% pop here at the open of course drew houston high fiving some of the other executives, hopefully in a few minutes he will be sitting down with deirdre to talk about this big day for them back to you guys over at the nyse. >> dropbox is over 30 bucks a share right now, a 44% gain. this coming after one of the worst market days we've had in a terrible week for tech, don't you think, deirdre >> keep in mind some of the other pure clouds have fared

better one company that dropbox is often compared to closed slightly higher yesterday. another didn't do so poorly. i want to bhoengs is making money here you saw drew houston he has a 25% stake sequoia, one of the most prominent vc firms in the valley has a 25% stake. there's asl and t. rowe price. these people are making a lot of money. stock up 45% on its debut. it was priced at $21 is there money left on the table? >> it's part art, part science you want to leave some upside out there after the ipo price, you don't want it to max out every dollar i think from the initial buyers this is probably a larger pop than the underwriters go for.

>> i would point out three days ago the price talk was 16 to 18. they upped it to 18 to 20 so we're almost 100% higher than we were on the low end of the expectations three days ago. i always like to point out what the insiders are selling at. the average insider selling price is $1.78 there are 1.78. >> that's the cost >> yes the average. now there's been a whole series of funding rounds, obviously, so they're mushing this together but they're required to publish this in is-1 it's one of my favorite things to go to, who's cashing out on an average basis now you see why the cheering is still going on that's my unicorns makes up for a lot of dogs. >> byron, how do you think this is going down in your neighborhood >> i think this is a great sign and it's funny you debate the pop and certainly that 15% to 25% is typically what you like to see but the end result is outstanding. we're sitting here with a $12

billion plus company a high free cash flow, reasonably high growth business in this borderline between consumer and enterprise cloud. congratulations to drew, to dennis, to the early investors and full team on a job well done this is a great milestone. >> byron, i'm not going to make an exact parallel with the kind of business but one year ago, salesforce announced they were buying mule software at $44 after the stock had a great run. is dropbox destined to be part of something bigger? >> quite likely. if you look at the mathematical probability, they'll probably have acquisition offers all the way along the way including when they were private. apple tried to buy them early on and drew resisted and so this is one of those companies as a true horizontal platform that could be appealing to uitors, that are trying to buy their way into the cloud computing space. then in the software industry

including the microsoft purchase of linkedin, which was the largest transaction in history so you can bet the a number of large suitors who are late to the game will view this as one of the few at-scale platforms they can use to get into the industry. >> i don't know if we want to take this off. it was interesting to see what was happening with box shares at the same time -- they've tended to rise and fall together. dree deirdre? >> both companies have been trying to distance themselves. dropbox saying it's more collaboration. box is more enterprise focused and dropbox more consumer focused. but byron mentioned the famous story about steve jobs once wanting to acquire dropbox and drew houston saying no thanks. i wonder if things have changed now. you look at google and microsoft and apple, they have these pretty beefy cloud consumer arms and productivity so do you think things have changed? what's stopping one of those companies from putting their focus into that area and killing

off a dropbox? >> well, the thing that's changed is that people realize this is a must have now. this is a ubiquitous part of the cloud ecosystem. enterprises and consumers alike need cloud storage so there will be multiple long-term winners. google has a fantastic offering at the low end which is where dropbox tends to compete you get into the box and share ecosystem and that's where enterprises are tending to look but it's a wide-open landscape and both sides of this broad spectrum need solutions so the competitive battle is heating up but so, too, are the stakes. this is one of those few hundred billion dollar plus markets that will be a permanent part in the cloud ecosystem. >> byron, thank you. let's go back to bertha on the floor. the company trading up 42%, bertha very nice pop. >> a very nice pop indeed. very nice pop for the nasdaq, if you will this is their fifth tech ipo this year and there are 40

companies set to list here next week we'll see a big one. the chinese version of netflix is set to have a valuation of $2 billion. and the fact that you have z-scaler, that got an 80% popper above the scale. now you're seeing dropbox. >> i think it's a bittersweet moment for apple they were interested in dropbox for a long time and far good reason apple's own file sharing -- and i'm a big a. guy -- their file-sharing service is not as good as dropb dropbox. no disloyalty to apple, they're just not i'm a dropbox user because of that i think apple is saying you should have been more persistent

>> this is the rare cloud play that has consumer recognition to an extreme degree. >> so many companies seem like esoteric they make for great ipos but they're less familiar. box shares are checking. they're down 4.5%. >> they have to change their name to risebox. >> meantime, dropbox on its debut at the nasdaq up 45% and it is over the $30 mark. that compares with the fish talk, somewhere between 16 and 18 my only question to you, sometimes there can be a hangover in the first couple months. >> you will find ipo people will often start talking about how the ipo performs after the first day because that's when it settles down and you start seeing real things it's often very difficult for average retail people to go out and buy this immediately on the pop so everybody sitting there saying oh, they're all up 30%. not a lot of people were able to get this at the open so bear

that in mind there's a little unreality about showing these prices >> it could be a double-edged sword when you have as good a debut as this. we've had many companies -- let's think of notable ones in the past that had a great first day, a little hangover but maybe we can ask drew houston himself about all this and about his plans. ceo of dropbox sitting down with deirdre bosa as their shares open on the nasdaq deirdre? >> we had to pull him away from the celebrations and the champagne i'm sure is flowing freely a very nice cop, con grpop. congratulations. >> i'm feeling great. >> i can't help but note you are one of the oldest unicorns around more than a decade not you yourself, your company why did you wait so long to go public and why now with the markets being so volatile this year >> we're ready this is a step we've been working on for a while and we look at the icon tech companies out there and you look at most of them had even more impact

after they went public and we've been spending the last few years getting to a great balance of scale profitability and growth and so it's time we're in the big leagues. >> absolutely. we've been talking about this all morning. you're in this unique space. you're a consumer name lots of people use you including b bob. how do you plan to differentiate yourself from some of the bigger players in this space like salesforce >> well, we have a great model and we like to talk about -- we're taking the best of our consumer roots and basically taking the consumer internet play book and applying it to business software. so combining the the virality and scale is a powerful combination. >> how does the consumer angle

allow you to get in through ken? >> we have over 300,000 paying dropbox business customers and 500,000 users. it starts simply you start using dropbox at home, bring it into work, start sharing and collaborating with a team on a project, that team becomes a department, becomes an industry. >>in your s-1 you wanted to be compared to a google drive, we spoke to box and he said his advice was stick to consumer, clearly he's worried about what you're going to do and at lassian and google cloud those are companies with productivity tools. suites like google drive how do you convince investors that you are more than just file sharing? >> well, since the beginning -- well, there's -- investors are excited about our model and they look at a company like atlassian and there are big similarities but one thing we do is have

scale from our consumer routes. >> in terms of those productivity tools, i know you have something called paper, which is your version of google drive but we didn't see any numbers in is-1. >> we're excited about paper people have created really cool docks. "saturday night live" is an early producer of pain per, it' transformed how they worked together pinterest is an early adopter of paper. so we find paper often lands with design teams or product managers who love the simplicity and the design and then it spreads from the design team to the marketing team or other teams in the company and the next thing you know the whole company is running on paper. >> can we expect numbers in your

first quarterly filing. >> we'll get there. >> you're not sure first quarter? okay now i know you are close with mark zuckerberg and you go to him for advice have you reached out to him in the last few weeks especially in light of the cambridge analytica goistuff go on. >> i haven't talked to him in a couple weeks but he's been a great friend. >> did he give you advice about becoming a public company? >> i think the best thing you can do to build a successful public company is build a great company. so we're focused on building in on the infrastructure. >> what are your thoughts on what's going on at facebook especially when you yourself is in the business that involves so much data security >> trust top of mind for all of us we can trust the services that we use, that's true for anyone i know mark and sheryl and the team are on top of this and that

they'll figure it out. >> how do you think about that now that you're a public company and you'll be communicating with investors and everything you do will be in the public? how do you make sure your data is secure? are you thinking about it differently now given what's going on >> security has been top of mind for us and our customers, as you can imagine. people are storing their most important information on dropbox and our scale means we can make huge investments here so we have a phenomenal security team, some of the best people -- best technical talent in the world and that's been true -- that was true as a private company and that will continue to be true as a public company. >> now a lot of bigger competitors -- i know you identified them in your s-1, they are doing now and really getting into this consumer space what you guys at dropbox have been doing for years google, microsoft, apple to name a few. if they really focus their attention on it, what's to stop them from taking over your business >> we've always lived in a competitive environment so literally since founding the

company we've had competition and in particular some larger companies have competing with us in a big way since 2011 and importantly all of our growth has happened in that environment, right so this isnot a -- competition isn't a new thing for us and our customers turn to us to tie together these different ecosystems and cloud ecosystems the days of using one sack or one ecosystem have been over for a long time. we've talked to our customers, can can you give us a cloud to sync our clouds. >> your partnership recently with drop box, sorry, google was that a part of sort of avoiding that push >> that's the other thing about our competition is not zero sum. in many ways, microsoft, google, sales force, are partners. we share a are the of customers and care about building the experience >> as a private company, are you trying to oi vad the amazon so-called death star as one called it. but now, you're a public

company. we watch this on a very regular basis on tv, but the mention of amazon going into business due to the stock price of other companies. you know, does jeff keep you up at night is that something you're going to be worried about as yo become a public company and if you could enfringe on your space >> i really admire him and everything he's done with amazon it's been an instrumental building block for us. we wouldn't be here if the public cloud hadn't been rising when we founded the company. so you know, we don't see him as in space things can exchange a at the same time, building a business and product like this takes time we have over a decade of investment space and think about the number of dollars we put into building our products we think we're investing more than anyone in the world

>> back in 2009, right, you said no thank you have you considered selling since then and especially in light of what sales force just did with meal soft this week, how would you feel about being acquired in the sfuch. >> here we are today, day one as a public company we've chosen the independent path we think we have, we're really proud of the business we've built and we know we have a lot of opportunity in front of us. yeah it's day one as a public company. >> talk about your finances a little bit more than a billion dollars in revenue last year and your losses are narrowing, but they're still hefty at $100 million. how do you plan on becoming profitab profitable >> our business has been growing well for measures like free cash flow, we've gone from an investment phase a couple of years ago until now. so we're disciplined both in terms of our coand get big

investments in areas like infrastructure so we've been able to get big savings there and then we've been focused on bidding a massive self-serve engine which so we and taking advantage of our scale and really innovating on our better mark >> thank you very much r for being with us. sure you're eager to get back out there. congratlaces >> thank you thanks for having me g >> shares now up nearly 50% from that opening price that's got to make you feel good >> all right >> just said all right >> attempted to ask him what he's going to do with the money. but it's, it's almost, you could do anything. pick one of a million things at this moist, michael. any way, dropbox shares are over $31 even as broader markets have now turned negative and selling off. >> they are. it seemed like there was a comment from the chinese ambassador saying all options are on the table for

retaliation. the backdrop, it's a fragile bounce this morning. we came from a deep loss in the future it's a tentative start >> we have this problem, if you can't get financials and tech to advance, right now, financials are at the lows of the day goldman is down over $4. that's $30 j.p. mopmorgan is down almost $. when you start selling off financials and tech's don't bounce, you don't have anything. >> what do the plans look like now? >> 8, 9% the regional backes were hit harder >> and the bond market isn't doing much as we were talking about earlier, there's a short-term funding issue. a little bit of a clog >> we don't have to drag in reagan >> you exb plain this short-term versus the cash libor. >> we'll do that closing bell. >> all right >> more squawkalry coming up in just a couple of minutes st wh ayitus at fidelity, trades are now just $4.95.

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welcome back there are shares of dropbox up 47%. just under the $31 mark.

for a company that prices between 16 a18 >> they're pricing at 21 without doubt, it's a bigger pop than i think most were handicapped. >> broader market is tipping lower. dow's down 105 points following yesterday's big decline. we're seeing weakness in the banks and other places where there's a lot of momentum. >> yeah, the banks are in particular focus even when the market was up t banks were weak. people wondering exactly how much to be concerned about some of the indigestion, the libor going up a lot it really dupt seem about systemic stress the way we got used to talking about ten years ago. it's much more about the highest cost of doing business if you're a wholesale batting averank >> i think this backdrop makes dropbox's debut more impressive. there's going to be questions about business model and just tried to back down >> you do wonder how much drop

box is a little exceptional in this in other words, it had great consumer name recognition. investors had been craving a chance to invest in this for three or four years. probably the pique and that's when these guys were making a name so i think you had some pebt pent up demand for it r, but still, imperressive. >> we'll see if that helps unleash an offering like this. yep. so as we keep an eye on the markets, the trade issues coming back to the floor here as well >> yes, comments by the chinese ambassador just exacerbating economisting trade concerns. the vix is now up above 24 heading into the weekend obviously, this market is in the lower end of its cent change raing and people wondering if these levels are going to hold >> what are you going to be watching >> definitely the banks. see if they get out and then the

bond market isn't doing much >> no. even after durable goods, it's not doing much to budge yields the opposite reaction. they're sitting down there in the background 2.8% thank you very much. that does it for us on "squawk alley. it's time for the halftime report with squat scott wapner welcome to the halftime report we begin with breaks news this hour fears of a trade war with china taking a new turn. the country's ambassador to the united states saying moepts ago that xhin won't rule out scaling o tout buying of treasuries. stocks are selling off with us to discuss all of this today, jim, steve, josh bron wni here mike wilson as well. kick this around steve, this was, if yo