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With the rise in the work-from-home culture due to the COVID-19 pandemic, DocuSign (DOCU) stock has been the top pick of Wall Street investors surging nearly 350% year-to-date.
On Thursday, September 3, the stock of DocuSign Inc (NASDAQ: DOCU) plunged nearly 9% after a massive bull run this year. DocuSign has largely benefited from the shit in work-from-home caused by the coronavirus pandemic. Before Thursday, the DOCU stock surged more than 350% year-to-date.
However, it seems that investors are taking a pause after a continuous rally at Wall Street. Post its 9% fall during the trading hours on Thursday, DOCU stock crashed another 9% in aftermarket hours. On Thursday closing, the DocuSign (DOCU) stock was trading at $242 with company valuations at $44.41 billion. This makes DocuSign larger than over 70% of the companies registered on the S&P 500.
DocuSign is a cloud-based document manager that helps businesses and individuals to sign documents electronically. Well, the company’s services have helped businesses to swiftly carry out further operations while minimizing the hassle.
On Thursday, the company reported better than expected results. The company reported earnings per share of 17 cents clocking $342.2 million in revenues. DocuSign said that a majority of its revenue came from subscriptions. In a statement to investors, company CEO Dan Springer said:
“In an accelerating digital world where business can be conducted from anywhere, the need to agree electronically and remotely has never been stronger”.
Springer is confident that even if the market and businesses resume to normalcy, or people start going to offices, their service can sustain. “With our situation, I really don’t see a regression to people saying ‘I want paper, I want manual processes,’” he said.
More Steam Left In the DOCU Stock?
As said, the DOCU stock price has already surged more than 350% year-to-date. However, it saw a sharp fall on Thursday for 9% both – during market hours and aftermarket hours. Well, it looks like the market had fairly priced-in the company growth in the bull-run. Hence, we can expect some short-term volatility and decline ahead. FX strategy at BK Asset Management, Boris Schlossberg told CNBC:
“They are truly one of the champs of the work-from-home environment. “Of course, it [does have a] ridiculous, absolutely insane valuation at 50 times sales. So it’s just the question of whether the market is going to feel kind enough to pick it up even if they do beat very, very hard. If they just come in in-line that really sets us up for a much bigger decline in the short term”.
However, Schlossberg remains positive for the long-term outlook of the company. Speaking about it, he said:
“This is a trend that will stay with us past Covid. Covid just simply accelerated the idea that digital signing contracts is the future. It’s a very boring, but a very necessary space. It’s dominating that space. So I really like it long term, even though there’s just absolutely no doubt that it can be very, very turbulent over the near term, and it’s really not for the faint hearted as far as trade ideas go now”.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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