Shares of tech stock DocuSign (NASDAQ:DOCU) crashed more than 24% on Friday after the company’s
latest earnings report failed to impress investors. The stock has been struggling mightily as what was
once a hot business during the pandemic, making it easy for people to sign documents virtually, has
become one of the biggest selloffs on the market. Year to date, DocuSign’s shares are down more than
56%. By comparison, the S&P 500 has fallen by just 18% during the same time frame.
Friday’s fall was due to the company’s latest earnings numbers falling short of expectations. For the first
quarter of fiscal 2023, DocuSign’s adjusted per-share profits were $0.38, below the $0.46 that Wall
Street was looking for. The good news was that revenue of nearly $589 million soundly beat the $581.8
million that analysts were looking for. However, with guidance calling for growth of no more than 8%
this year, down from a previous forecast of 15%, the stock had more bad news than good for investors
this report.
With the steep fall in price, DocuSign is now trading at levels lower than where it was before the
pandemic, and before there was a surge in demand for its services. This could be an excellent
opportunity for investors to buy on the dip as before the pandemic, the company was generating less
than $1 billion in sales. DocuSign is now at a run rate of close to $2.4 billion in annual revenue. Although
the business may see slowing sales growth, it’s still an attractive long-term buy.
