What Happened?
Shares of electronic signature company DocuSign (NASDAQ: DOCU) fell 11.8% in the afternoon session after 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.
The shares closed the day at $72.10, down 12.2% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy DocuSign? Access our full analysis report here, it’s free.
What Is The Market Telling Us
DocuSign’s shares are quite volatile and have had 17 moves greater than 5% over the last year. But moves this big are rare even for DocuSign and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 25 days ago when the stock gained 6.4% on the news that the company reported better-than-expected second-quarter earnings and raised its full-year revenue guidance. For its second quarter, the electronic-signature company announced revenue of $800.6 million and adjusted earnings per share of $0.92, surpassing analyst expectations. Billings, an indicator of future revenue, also showed robust growth, increasing 12.9% year-over-year to $818 million. Buoyed by the strong performance, DocuSign increased its full-year revenue forecast to a midpoint of $3.20 billion, up from its previous guidance. Overall, it was a solid "beat-and-raise" quarter for the company, with key metrics exceeding Wall Street's expectations.
DocuSign is down 20% since the beginning of the year, and at $72.32 per share, it is trading 32.4% 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 $336.00.
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