What Happened?

Shares of electronic signature company DocuSign (NASDAQ: DOCU) fell 4.2% in the afternoon session after the stock continued to decline as ChatGPT developer OpenAI unveiled a new competing product, DocuGPT. 

The stock had already plunged over 11% the previous day following the announcement. The new tool from the artificial intelligence giant is an AI agent designed to review large volumes of contract data, converting them into a structured, searchable format. OpenAI claims that DocuGPT cuts its own contract management workload in half. The introduction of a powerful, AI-driven competitor has sparked significant investor concern about DocuSign's market position and future growth prospects in the digital agreement space, fueling the continued sell-off.

The shares closed the day at $68.94, down 4.4% from previous close.

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What Is The Market Telling Us

DocuSign’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock dropped 11.8% on the news that OpenAI launched a new product called DocuGPT, sparking concerns about new competition. This new system converted contracts into organized and searchable data formats. Analysts suggested that DocuGPT could become a formidable competitor to DocuSign's key agreement-management sector, which was a key driver of growth for the company. The arrival of this new artificial intelligence (AI) competition rattled investors, leading to the significant stock decline.

DocuSign is down 23.7% since the beginning of the year, and at $68.97 per share, it is trading 35.5% below its 52-week high of $106.99 from December 2024. Investors who bought $1,000 worth of DocuSign’s shares 5 years ago would now be looking at an investment worth $310.31.

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