Key Points
- DocuSign recently reported highly positive fiscal third-quarter results.
- The stock plunged because it looks like there could be a slowdown up ahead.
- The recent dip looks more like an opportunity to buy a great growth stock at a discount than the beginning of a long downward slide.
Why is DocuSign stock down 20% after its earnings report?
Mar 11, 2022 · The market is worried that the major boost from the shift to work-from-home is over, and DocuSign’s growth will slow down materially. In addition, the market is sensitive to growth rates of high-PE...
What drove DocuSign’s shares down Friday?
Mar 11, 2022 · DocuSign remains a rather expensive stock despite the strong pullback. DocuSign Stock Drops As Traders Focus On Slowing Growth. Shares of the e-signature company DocuSign gained strong downside momentum after the company released its fourth-quarter report. DocuSign reported total revenue of $580.8 million and adjusted earnings of $0.48 per share, …
Why did DocuSign’s growth slump?
Feb 08, 2022 · Try refreshing the page. Online signature company DocuSign stock (NASDAQ: DOCU) has declined by about 18% over the last month (about 21 trading days), trading at about $119 currently ...
Is DocuSign (docu) poised to recover?
Dec 03, 2021 · Seems the culprit was DocuSign's decelerating billings and weak fourth-quarter outlook. The digital signature provider is guiding for revenue of $560 million at the midpoint of its guidance range ...
Looks like back-to-work is finally catching up with the e-signature specialist
Daniel W. Vena, CPA, CGMA is a long-term investor searching for intangibles that provide explosive growth opportunities in his investments. He served on active duty with the US Army and has a Bachelor's degree in accounting. Follow @dannyvena
What happened
Shares of DocuSign ( NASDAQ:DOCU) were crushed in early trading Friday, plunging as much as 41.4%. As of 10:42 a.m. ET, the stock was still down 40.4%.
So what
For its fiscal 2022 third quarter (ended Oct. 31), DocuSign delivered revenue of $545.5 million, up 42% year over year, driven by subscription revenue of $528.6 million, up 44%. This resulted in adjusted earnings per share (EPS) of $0.58, surging 163% from EPS of $0.22 in the prior-year quarter.
Now what
Given DocuSign's seemingly robust performance, what caused the stock to plummet? Seems the culprit was DocuSign's decelerating billings and weak fourth-quarter outlook.
What happened
DocuSign ( NASDAQ:DOCU) stock tumbled 11.5% in November as work-from-home stocks took a beating. There wasn't any major company-specific news for DocuSign last month, but it couldn't overcome a broader sell-off.
So what
DocuSign's November was one of those rare instances of a stock rising or falling without any major news. The company released a terrible earnings report in the first week of December, which sent the stock another 40% lower.
Now what
A quarter that was considered disastrous still featured 28% revenue growth and a wider-than-expected operating profit margin. The company forecasts further growth next quarter, and it operates a cash-flow-positive business.
Why DocuSign Stock Is Down
DocuSign’s third-quarter earnings wasn’t a terrible report by any means. In fact, it shows a lot of positives, such as continued top-line momentum and improving margins. Even more, the company is expanding its partnership with the leading CRM platform Salesforce (NYSE: CRM).
Can the Stock Bounce Back?
Seeing that DocuSign stock saw its most significant decline in share price ever last week, investors are hoping share prices bounce back quickly. Although the company is at a lower value, it’s still not cheap.
Why You Should Avoid DocuSign Stock
Several things are working against DocuSign stock right now. Despite continued top-line growth, the company still isn’t turning a profit.
Are There Any Reasons to Buy DocuSign Stock Right Now?
Looking at DocuSign’s stock chart, you would think something detrimental happened in its latest earnings. But the reaction results from what to expect from the company in the future.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime.
