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Why Shares of Dropbox Plunged 17% in July

By Chris Neiger - Updated Aug 3, 2018 at 2:26PM

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Some incorrect reporting about the company giving researchers access to user data didn't sit well with investors.

What happened

Shares of the collaboration-platform company Dropbox (DBX 3.40%) fell 17.4% in July, according to data provided by S&P Global Market Intelligence, after a Harvard Business Review (HBR) report incorrectly stated that some of its researchers had been given access to non-anonymous Dropbox users data. 

So what

While it's not unusual for technology companies to work with researchers to provide some information and data for research studies, the HBR researchers originally wrote in their report that, "Dropbox gave us access to project-folder-related data, which we aggregated and anonymized, for all the scientists using its platform over the period from May 2015 to May 2017 -- a group that represented 1,000 universities." That claim made it sound like the data they had access to wasn't originally anonymous when Dropbox gave it to them.

Image of stock chart with yellow arrow falling.

Image source: Getty Images.

Dropbox and HBR corrected some wording in the study soon afterward, and clarified that the user data was anonymized before it was provided to the researchers. But several online discussions and press stories had already popped up by then, which spooked investors.

In the recent past, reports like this probably wouldn't have pushed a technology company's share price down, but investors are much more concerned about the effects of user data and privacy -- and how companies mishandle them -- in light of Facebook's recent problems

Now what

Dropbox was quick to address the situation, but the company's share price hasn't fully recovered yet. It's up about 5% since the beginning of this month. This might have been just an instance of some researchers using incorrect phrasing, but it certainly stands as a warning to tech companies providing data to third parties -- and, in particular, on how they communicate about it.

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