Why did DocuSign plunge 11% two days after setting record?
Despite hitting an all-time high price a day before its Q2 report, Thursday’s US tech sell-off quickly corrected DocuSign’s early-week gains.
Why did DocuSign stock plunge 11% on Friday?
US electronic signature solutions company DocuSign saw its shares close 11% lower last Friday 04 September 2020, just two days after hitting an all-time high price of US$290.
The surprising decline had coincided with last week’s US tech stock sell-off, which took down FAANG (Facebook, Amazon, Apple, Netflix, Google) by roughly 6.5% on average.
DocuSign’s stock price correction also took place despite the company posting better-than-expected second quarter results for fiscal 2021.
Shares ended the week at US$216 a share on the IG platform.
What’s the DocuSign stock and earnings forecast?
DocuSign’s revenue for the second quarter exceeded Wall Street estimates (US$318.6 million) by 8%, while earnings per share (US$0.17) also surpassed analyst expectations (US$0.08) by a whopping 100%.
These impressive results – largely predicated on people not being able to meet face to face due to Covid-19 – have also prompted company CEO Dan Springer to state that ‘the need to agree electronically and remotely has never been stronger’.
‘We are just scratching the surface of our Agreement Cloud opportunity and believe we are increasingly becoming an essential cloud-software platform for organisations of all sizes,’ he added.
In terms of its share price performance, Springer said that the company was ‘somewhat surprised’ to see its stock rally over 30% in the lead up to its earnings announcement, only to ‘give it all back’ right after, he told Yahoo Finance.
Nevertheless, he noted that ‘the momentum in the stock is strong’ as agreed by analysts – thanks to its 45% revenue growth. He concluded by saying that he ‘tries not to get too focused on short-term fluctuations’.
DocuSign has received a consensus rating of ‘overweight’ from 18 analysts, alongside an average target share price of US$250.26, according to MarketWatch.
Ready to buy and sell DocuSign stock?
CFDs allow you to do so without trading the underlying asset. Open a live or demo IG account today.
Highlights from DocuSign’s Q2 results
Here are some things that stood out in the e-signature and cloud agreement solution’s second quarter results for the three months ended 31 July 2020:
- Total revenue was US$342.2 million, an increase of 45% year-over-year. Subscription revenue was US$323.6 million, up 47% year-over-year. Professional services and other revenue was $18.6 million, up 25% year-over-year.
- GAAP (standard accounting) gross margin was 74% in both comparative periods. Non-GAAP (adjusted) gross margin was 78% in both comparative periods.
- GAAP (standard accounting) net loss per basic and diluted share was US$0.35 on 185 million shares outstanding compared to US$0.39 on 175 million shares outstanding in the same period last year.
- Non-GAAP (unadjusted) net income per diluted share was US$0.17 on 203 million shares outstanding compared to US$0.01 on 189 million shares outstanding in Q2 2020.
- Net cash provided by operating activities was US$118.1 million compared to US$26.4 million a year ago.
- Free cash flow was US$99.8 million compared to US$11.9 million a year ago.
- Cash, cash equivalents, restricted cash and investments were US$740.6 million at the end of the quarter.
How to trade US stocks with IG
Are you feeling bullish or bearish on DocuSign and other US stocks?
Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Look closer this US earnings season
Discover opportunities with using our award-winning technology* and range of educational resources.
- Get expert analysis on upcoming announcements
- Set automated alerts to never miss an opportunity
- Choose from 12,000+ shares with our stock screener
* Based on the Investment Trends 2018 Singapore CFD & FX Report based on a survey of over 4,500 traders and investors. Awarded the Best Online Trading Platform by Influential Brands in 2022.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.