(Reuters) - Dropbox Inc’s shares soared around 40 percent in their market debut on Friday as investors rushed to buy into the biggest tech IPO in more than a year.

FILE PHOTO: The DropBox logo is seen in this illustration photo July 28, 2017. REUTERS/Thomas White/Illustration

The stock opened at $29 on the Nasdaq and shot up to as high as $31 in early trading. At the stock’s opening price, the company touched a market valuation of $12.67 billion, above the $10 billion valuation it had in its last private funding round.

Dropbox’s debut marks an end to a long dry spell in the U.S. IPO market for big names in the technology sector. The last so-called tech unicorn to hit the market was Snapchat owner Snap Inc last March.

The pop in price may bode well for music streaming service Spotify - valued at roughly $19 billion in the private market - that has also filed for a direct listing and will start trading on the New York Stock Exchange on April 3.

“Dropbox is going public at the right time It has an attractive story to justify its need for financing and the market dynamics are good,” said Josh Lerner, professor of Investment Banking at Harvard Business School.

“But at the same time the environment is also competitive”.

The San Francisco-based company, which started as a free service to share and store photos, music and other large files, competes with much larger technology firms such as Alphabet Inc’s Google, Microsoft Corp and Amazon.com Inc. Its main rival is Box Inc.

It has yet to turn a profit, but that’s common for startups that invest heavily in their growth. However, as a public company Dropbox will be under pressure to quickly trim its losses.

The company reported revenue of $1.11 billion in 2017, up from $844.8 million a year earlier. Full-year net loss nearly halved from the $210.2 million in 2016.

The IPO was priced at $21 apiece late on Thursday - $1 above the projected range of $18 to $20 on the back of strong demand.

“We are excited to see that markets are receptive to a tech IPO,” said Michael Carvin, Chief Executive of personal finance technology firm SmartAsset.

Reporting by Sweta Singh in Bengaluru; Additional reporting by Nikhil Subba; Editing by Dan Burns

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