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Why Is DocuSign (DOCU) Stock Down 25% Today?

Investor Place · 06/10/2022 09:45

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

DocuSign (NASDAQ:DOCU) stock is down more 25% today after the maker of electronic signature software reported disappointing quarterly results.

The San Francisco-based company, which allows organizations to manage electronic agreements, reported earnings that fell well short of expectations on Wall Street, sending its stock plummeting today. At the same time, DocuSign gave lukewarm forward guidance that has further hurt confidence in the company, putting additional pressures on its already battered share price. DOCU stock is down 44% year-to-date to $87.36 a share, dropping along with the rest of the software sector.

What Happened

DocuSign reported earnings per share of 38 cents compared to 46 cents that was expected by analysts, according to Refinitiv data. The company’s revenue totaled $588.7 million compared to $581.8 million that had been anticipated. Worst of all, DocuSign announced that its net loss widened to $27.4 million from $8.3 million during the year-earlier period.

Looking ahead, DocuSign forecast revenue of $600 million to $604 million for the current second quarter. That’s inline with the consensus estimate of analysts for Q2 revenue of $601.7 million. For all of this year, DocuSign sees $2.47 billion to $2.48 billion in revenue, compared to the $2.479 billion expected on the street.

Why It Matters

DocuSign experienced strong growth during the pandemic as companies working remotely relied heavily on its electronic signature and contract management software. DOCU stock hit an all-time high of just under $315 a share last summer. Since then, the share price has come down 72% to now trade at less than $90.

DocuSign has said that its business growth has slowed coming out of the pandemic, and that it has been struggling to adjust to the new environment as companies return to working in the office and resume in-person meetings. In announcing its earnings, DocuSign said that it now plans to slow its pace of hiring this year “to appropriately balance growth and profitability.”

What’s Next for DOCU Stock

It’s a bad day to be a shareholder of DocuSign. Prospects for the company and its stock do not look good following the latest earnings print. Whether DocuSign can recover in the long run remains to be seen. But in the near-term, DOCU stock looks be headed much lower, further erasing any profits that shareholders may have had.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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