The Make or Break Moment for Dropbox

An earnings report is set to send a stock dramatically higher or lower. There’s a way to profit no matter which way it goes.

After the close of trading this Thursday, Dropbox (Nasdaq: DBX) is scheduled to report earnings. If you take one look at the chart below, you’ll understand why we’re calling this report a “make or break” moment.

As you can see, the cloud-based file management company traded as high as $32 back in August. Its all-time high was around $42 last July. But lately it’s been in a well-defined downtrend that recently went as low as $22. Leading up to the company’s earnings report this week, shares have bounced up to the 50-day moving average just below $25, which is where we pick up the situation today.

You see, either Dropbox reports strong earnings that act as a catalyst to break shares out of their downside trend or the bears once again punish Dropbox for failing to meet expectations. The company’s last three earnings reports have resulted in moves of 7%, 10% and 7% – all of which were lower. Knowing that, you can understand the true magnitude of Thursday’s report.

From a technical perspective, Thursday’s earnings can either trigger a move above the 50-day moving average – which could extend back to $28 (and higher) – or renew the disappointment – and shares will fall back down to $22 (and lower). Regardless, it looks like a big move is on the horizon.

Aside from flipping a coin, how do you play this?

Today in The War Room beta, we offered the perfect solution. For less than $2, you can own a position that potentially doubles your money no matter whether Dropbox moves UP or DOWN. As long as Dropbox shows enough delta in reaction to earnings, this position will pay off.


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