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DocuSign: More Upbeat, Not Compelled Yet After This Re-Set

Dec. 05, 2021 6:42 AM ETDocuSign, Inc. (DOCU) Stock21 Comments


  • DocuSign has seen a terrible day after investors penalized the stock very hard, as bookings growth unexpectedly slowed down.
  • Management takes the blame, yet I recognize that the company is up against some tough comparables as a result of the pandemic last year.
  • Valuations have been reset as the business is now economically breaking-even, a promising side-benefit of slower growth.
  • I see appeal emerging here, but do not find shares necessarily appealing here.
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hapabapa/iStock Editorial via Getty Images

DocuSign (NASDAQ:DOCU) deserves a much-needed update on a dated investment thesis, after my former take on the name dates back to September 2019, ahead of the pandemic and related to those trends induced by this situation.

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Comments (21)

marriottmare profile picture
Time to buy!
I wasn't directly involved but I heard from several people in small and medium sized organizations who were DocuSign customers for years that DocuSign salespeople were really arrogant and raised their prices substantially during their last annual license renewal.

For most documents that need a simple signature, a PDF from Adobe allows a signature for free. I don't think they understand their competition. Some customers renewed their applications because they felt they had no choice with such short notice, but they do feel extorted and are in the process of changing vendors.
Great perspective looking at 2019 vs today. Most would assume it’s cheap based on the 40% sell-off but not yet.
read a story in the WSJ 1-2 weeks ago describing how millenials won't use money mgrs as their parents did because they don't see a benefit for the cost. While interviewing some of these self-directed investors, a few of them made the point that many millenials are bigger risk takers and invest for multbaggers and have little concern about the downside. I bet that changes in a hurry now... but, in the meantime, i thank you for your money.
astute pathways profile picture
Still overvalued
No Guilt profile picture
Bought a starter position Friday and am willing to add more if we see further weakness.

Can’t complain on the author/ article but it reminded me that like 75% of people say I’ll pass for NOW but if the stock dropped 20% THEN I’d buy it.

But usually there’s a reason why it dropped and then they say, if it goes to XYZ price THEN I’d buy it.

It’s always lower/later etc.

Of course everybody wants a “deal” and special pricing but I’ve realized a lot of thee types get bit by value traps as they catch a falling knife OR the good stock on a dip races back up and they end up paying more later or missing it and regretting it.
Thx for your xlnt article on DOCU. It has first mover advantage & brand recognition. Under $140 it's a good buy and inder $130 it is very good & under $120 it is a steal.
Easy to switch, little by way of moat. So first mover advantage doesn't mean much, which they are finding out.
@Aminator No, not “little by way of moat.” What isn’t “little by way of moat?” Moats are built over time as the company and brand becomes recognized as the undisputed leader in its space. It has little to do with the difficulty of replicating the technology or necessary IP. Coca-cola was just a drink. Google was just a search engine. Nike made shoes. Where was their moat until they became known in their space for selling great products? Docusign has 70% of the market share in terms of e-signature contract services, and the company name has even become a verb for e-signing a document. So yes, in its space, it has quite a formidable moat. Furthermore, though there’s a common misconception that DOCU is a one trick pony, if you do any research on the company, you’ll see that it has a multitude of services that it offers and can cross-sell and upsell (over 20). In fact they’ve just begun to really push their most potentially profitable service, contract life-cycle management, which connect all parties every step of the way during the revision process from when a contract is first being developed until it’s on its last signature. And this is one area where the CEO admits they’ve become somewhat lax over the last year, instead becoming complacent to meet the ramped up demand for their basic service, rather than aggressively pursuing their customers to acquire more. Once they get back at this, it should lead to improved revenue growth. I think Docusign is a much better company than the bears who’ve emerged from the woods to criticize it now that it’s dropped 40% are implying. While the Billings reports are certainly concerning, it’s not something that can’t be righted given a couple quarters of redirection.
@davedontcave what about ADBE?
Et20 profile picture
Drop in price presents an opportunity to accumulate. Chart and sentiment isn't hot right now so I will wait.
helliott profile picture
Bought Friday. Will buy this Friday. Next Friday. Under $150, I like the stock
Stock is a buy. If it falls more I’ll buy more. Not trying to time this one. It’s a long term play. Great article
No Guilt profile picture

@FLMike I think long term is the only option right now. Stocks don’t recover so fast from 40% drops, so investing with less than a one year horizon would be foolish. But long term, I think it’s a very good choice at its current price.
There is zero opinion on moat, capability to innovate and attractiveness of the space going forward. Such notes offer zero value to SA subscribers.
bluescorpion0 profile picture
@Belu21 Can you tell me one other creative stock pick I can own (besides ADBE) that would give me exposure to document management and esigning, directly or indirectly?
Et20 profile picture

Box is hoping to jump on to the esign bandwagon and they have a good springboard to do it from
@scorpion.north hellosign is among fastest growing segments for DBX, which I am putting back on my watchlist
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