diff --git a/packages/client/src/components/Component.svelte b/packages/client/src/components/Component.svelte
index 9466bc461b..4f82523ec0 100644
--- a/packages/client/src/components/Component.svelte
+++ b/packages/client/src/components/Component.svelte
@@ -22,6 +22,7 @@
   import Placeholder from "components/app/Placeholder.svelte"
   import ScreenPlaceholder from "components/app/ScreenPlaceholder.svelte"
   import ComponentPlaceholder from "components/app/ComponentPlaceholder.svelte"
+  import { DNDPlaceholderID } from "constants"
 
   export let instance = {}
   export let isLayout = false
@@ -458,7 +459,7 @@
     class:editing
     class:block={isBlock}
     class:explode={interactive && hasChildren && inDndPath}
-    class:placeholder={id === "placeholder"}
+    class:placeholder={id === DNDPlaceholderID}
     data-id={id}
     data-name={name}
     data-icon={icon}
diff --git a/packages/client/src/components/preview/DNDHandler.svelte b/packages/client/src/components/preview/DNDHandler.svelte
index 01929d58d8..40f52dd1ae 100644
--- a/packages/client/src/components/preview/DNDHandler.svelte
+++ b/packages/client/src/components/preview/DNDHandler.svelte
@@ -3,11 +3,11 @@
   import { get } from "svelte/store"
   import IndicatorSet from "./IndicatorSet.svelte"
   import { builderStore, componentStore } from "stores"
-  import PlaceholderOverlay from "./PlaceholderOverlay.svelte"
+  import DNDPlaceholderOverlay from "./DNDPlaceholderOverlay.svelte"
   import { Utils } from "@budibase/frontend-core"
   import { findComponentById } from "utils/components.js"
 
-  let sourceId
+  let sourceInfo
   let targetInfo
   let dropInfo
 
@@ -15,7 +15,8 @@
   // the value of one of the properties actually changes
   $: parent = dropInfo?.parent
   $: index = dropInfo?.index
-  $: builderStore.actions.updateDNDPlaceholder(parent, index)
+  $: bounds = sourceInfo?.bounds
+  $: builderStore.actions.updateDNDPlaceholder(parent, index, bounds)
 
   // Util to get the inner DOM node by a component ID
   const getDOMNode = id => {
@@ -37,14 +38,14 @@
   // Callback when drag stops (whether dropped or not)
   const stopDragging = () => {
     // Reset state
-    sourceId = null
+    sourceInfo = null
     targetInfo = null
     dropInfo = null
     builderStore.actions.setDragging(false)
 
     // Reset listener
-    if (sourceId) {
-      const component = document.getElementsByClassName(sourceId)[0]
+    if (sourceInfo) {
+      const component = document.getElementsByClassName(sourceInfo.id)[0]
       if (component) {
         component.removeEventListener("dragend", stopDragging)
       }
@@ -65,14 +66,33 @@
     component.addEventListener("dragend", stopDragging)
 
     // Update state
-    sourceId = component.dataset.id
-    builderStore.actions.selectComponent(sourceId)
+    const parentId = component.dataset.parent
+    const parent = findComponentById(
+      get(componentStore).currentAsset.props,
+      parentId
+    )
+    const index = parent._children.findIndex(
+      x => x._id === component.dataset.id
+    )
+    sourceInfo = {
+      id: component.dataset.id,
+      bounds: component.children[0].getBoundingClientRect(),
+      parent: parentId,
+      index,
+    }
+    builderStore.actions.selectComponent(sourceInfo.id)
     builderStore.actions.setDragging(true)
 
-    // Execute this asynchronously so we don't kill the drag event by hiding
-    // the component in the same handler as starting the drag event
+    // Set initial drop info to show placeholder exactly where the dragged
+    // component is.
+    // Execute this asynchronously to prevent bugs caused by updating state in
+    // the same handler as selecting a new component (which causes a client
+    // re-initialisation).
     setTimeout(() => {
-      onDragEnter(e)
+      dropInfo = {
+        parent: parentId,
+        index,
+      }
     }, 0)
   }
 
@@ -182,7 +202,7 @@
 
   // Callback when on top of a component
   const onDragOver = e => {
-    if (!sourceId || !targetInfo) {
+    if (!sourceInfo || !targetInfo) {
       return
     }
     handleEvent(e)
@@ -190,14 +210,14 @@
 
   // Callback when entering a potential drop target
   const onDragEnter = e => {
-    if (!sourceId) {
+    if (!sourceInfo) {
       return
     }
 
     // Find the next valid component to consider dropping over, ignoring nested
     // block components
     const component = e.target?.closest?.(
-      `.component:not(.block):not(.${sourceId})`
+      `.component:not(.block):not(.${sourceInfo.id})`
     )
     if (component && component.classList.contains("droppable")) {
       targetInfo = {
@@ -216,7 +236,7 @@
     let target, mode
 
     // Convert parent + index into target + mode
-    if (sourceId && dropInfo?.parent && dropInfo.index != null) {
+    if (sourceInfo && dropInfo?.parent && dropInfo.index != null) {
       const parent = findComponentById(
         get(componentStore).currentAsset?.props,
         dropInfo.parent
@@ -225,9 +245,17 @@
         return
       }
 
+      // Do nothing if we didn't change the location
+      if (
+        sourceInfo.parent === dropInfo.parent &&
+        sourceInfo.index === dropInfo.index
+      ) {
+        return
+      }
+
       // Filter out source component and placeholder from consideration
       const children = parent._children?.filter(
-        x => x._id !== "placeholder" && x._id !== sourceId
+        x => x._id !== "placeholder" && x._id !== sourceInfo.id
       )
 
       // Use inside if no existing children
@@ -244,7 +272,7 @@
     }
 
     if (target && mode) {
-      builderStore.actions.moveComponent(sourceId, target, mode)
+      builderStore.actions.moveComponent(sourceInfo.id, target, mode)
     }
   }
 
@@ -278,5 +306,5 @@
 />
 
 {#if $builderStore.isDragging}
-  <PlaceholderOverlay />
+  <DNDPlaceholderOverlay />
 {/if}
diff --git a/packages/client/src/components/preview/DNDPlaceholder.svelte b/packages/client/src/components/preview/DNDPlaceholder.svelte
new file mode 100644
index 0000000000..9efabdbc27
--- /dev/null
+++ b/packages/client/src/components/preview/DNDPlaceholder.svelte
@@ -0,0 +1,33 @@
+<script>
+  import { builderStore } from "stores"
+  import { DNDPlaceholderID } from "constants"
+
+  $: style = getStyle($builderStore.dndBounds)
+
+  const getStyle = bounds => {
+    if (!bounds) {
+      return null
+    }
+    return `--height: ${bounds.height}px; --width: ${bounds.width}px;`
+  }
+</script>
+
+{#if style}
+  <div class="wrapper">
+    <div class="placeholder" id={DNDPlaceholderID} {style} />
+  </div>
+{/if}
+
+<style>
+  .wrapper {
+    overflow: hidden;
+  }
+  .placeholder {
+    display: block;
+    height: var(--height);
+    width: var(--width);
+    max-height: 100%;
+    max-width: 100%;
+    opacity: 0;
+  }
+</style>
diff --git a/packages/client/src/components/preview/PlaceholderOverlay.svelte b/packages/client/src/components/preview/DNDPlaceholderOverlay.svelte
similarity index 88%
rename from packages/client/src/components/preview/PlaceholderOverlay.svelte
rename to packages/client/src/components/preview/DNDPlaceholderOverlay.svelte
index 86950c533e..a762f35319 100644
--- a/packages/client/src/components/preview/PlaceholderOverlay.svelte
+++ b/packages/client/src/components/preview/DNDPlaceholderOverlay.svelte
@@ -1,11 +1,12 @@
 <script>
   import { onMount } from "svelte"
+  import { DNDPlaceholderID } from "constants"
 
   let left, top, height, width
 
   onMount(() => {
     const interval = setInterval(() => {
-      const node = document.getElementById("placeholder")
+      const node = document.getElementById(DNDPlaceholderID)
       if (!node) {
         height = 0
         width = 0
diff --git a/packages/client/src/components/preview/Placeholder.svelte b/packages/client/src/components/preview/Placeholder.svelte
deleted file mode 100644
index 3457a49e6d..0000000000
--- a/packages/client/src/components/preview/Placeholder.svelte
+++ /dev/null
@@ -1,11 +0,0 @@
-<div id="placeholder" class="placeholder" />
-
-<style>
-  .placeholder {
-    display: block;
-    min-height: 64px;
-    min-width: 64px;
-    flex: 0 0 64px;
-    opacity: 0;
-  }
-</style>
diff --git a/packages/client/src/constants.js b/packages/client/src/constants.js
index 51ef3fd124..23d44a34f5 100644
--- a/packages/client/src/constants.js
+++ b/packages/client/src/constants.js
@@ -29,3 +29,7 @@ export const ActionTypes = {
   ClearForm: "ClearForm",
   ChangeFormStep: "ChangeFormStep",
 }
+
+export const DNDPlaceholderID = "dnd-placeholder"
+export const DNDPlaceholderType = "dnd-placeholder"
+export const ScreenslotType = "screenslot"
diff --git a/packages/client/src/stores/builder.js b/packages/client/src/stores/builder.js
index e3cf2b3579..0404183c91 100644
--- a/packages/client/src/stores/builder.js
+++ b/packages/client/src/stores/builder.js
@@ -1,7 +1,6 @@
 import { writable, get } from "svelte/store"
 import { API } from "api"
 import { devToolsStore } from "./devTools.js"
-import { findComponentPathById } from "../utils/components.js"
 
 const dispatchEvent = (type, data = {}) => {
   window.parent.postMessage({ type, data })
@@ -21,9 +20,9 @@ const createBuilderStore = () => {
     navigation: null,
     hiddenComponentIds: [],
     usedPlugins: null,
-
     dndParent: null,
     dndIndex: null,
+    dndBounds: null,
 
     // Legacy - allow the builder to specify a layout
     layout: null,
@@ -109,10 +108,11 @@ const createBuilderStore = () => {
       // Notify the builder so we can reload component definitions
       dispatchEvent("reload-plugin")
     },
-    updateDNDPlaceholder: (parent, index) => {
+    updateDNDPlaceholder: (parent, index, bounds) => {
       store.update(state => {
         state.dndParent = parent
         state.dndIndex = index
+        state.dndBounds = bounds
         return state
       })
     },
diff --git a/packages/client/src/stores/components.js b/packages/client/src/stores/components.js
index 43bc1c2ff6..e1d6012150 100644
--- a/packages/client/src/stores/components.js
+++ b/packages/client/src/stores/components.js
@@ -5,8 +5,9 @@ import { devToolsStore } from "./devTools"
 import { screenStore } from "./screens"
 import { builderStore } from "./builder"
 import Router from "../components/Router.svelte"
-import Placeholder from "../components/preview/Placeholder.svelte"
+import DNDPlaceholder from "../components/preview/DNDPlaceholder.svelte"
 import * as AppComponents from "../components/app/index.js"
+import { DNDPlaceholderType, ScreenslotType } from "../constants.js"
 
 const budibasePrefix = "@budibase/standard-components/"
 
@@ -109,9 +110,9 @@ const createComponentStore = () => {
     }
 
     // Screenslot is an edge case
-    if (type === "screenslot") {
+    if (type === ScreenslotType) {
       type = `${budibasePrefix}${type}`
-    } else if (type === "placeholder") {
+    } else if (type === DNDPlaceholderType) {
       return {}
     }
 
@@ -130,10 +131,10 @@ const createComponentStore = () => {
     if (!type) {
       return null
     }
-    if (type === "screenslot") {
+    if (type === ScreenslotType) {
       return Router
-    } else if (type === "placeholder") {
-      return Placeholder
+    } else if (type === DNDPlaceholderType) {
+      return DNDPlaceholder
     }
 
     // Handle budibase components
diff --git a/packages/client/src/stores/screens.js b/packages/client/src/stores/screens.js
index 7419e24a53..5c630d2adf 100644
--- a/packages/client/src/stores/screens.js
+++ b/packages/client/src/stores/screens.js
@@ -5,6 +5,7 @@ import { appStore } from "./app"
 import { RoleUtils } from "@budibase/frontend-core"
 import { findComponentById, findComponentParent } from "../utils/components.js"
 import { Helpers } from "@budibase/bbui"
+import { DNDPlaceholderID, DNDPlaceholderType } from "constants"
 
 const createScreenStore = () => {
   const store = derived(
@@ -58,8 +59,8 @@ const createScreenStore = () => {
 
         // Insert placeholder
         const placeholder = {
-          _component: "placeholder",
-          _id: "placeholder",
+          _component: DNDPlaceholderID,
+          _id: DNDPlaceholderType,
           static: true,
         }
         let parent = findComponentById(activeScreen.props, dndParent)