Why DocuSign (DOCU) Shares Are Plunging Today

Anthony Lee /
2024/02/06 12:08 pm EST

What Happened:

Shares of e-signature company DocuSign (DOCU) fell 7.9% in the morning session after the company announced plans to improve the efficiency of its business operations while remaining an independent company. As part of the plan, the company expects to reduce its headcount by 6%, with the majority of the affected role in sales and marketing. DocuSign expects to incur approximately $28 to $32million in restructuring charges in relation to the plan. In addition, the company reiterated its Q4 and FY 2024 financial guidance. The stock is likely down as the market reassesses the potential for the company to be taken private, with the possibility for shareholders to exit their current positions at a premium in the event of a buyout appearing more unlikely.

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 very volatile and over the last year have had 11 moves greater than 5%. In context of that, today's move is indicating 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 one day ago, when the company dropped 8.3% on the news that Reuters reported that private equity firms Bain Capital and Hellman & Friedman suspended their plan to acquire the company due to disagreements on the acquisition price. According to the sources, it is possible that the deal talks resume in the future. DocuSign has been at the center of takeover chatters in recent months. On February 1, 2024, Bloomberg reported that JPMorgan and Bank of America were in talks to finance a $ 13 billion buyout of the company.

DocuSign is down 11.5% since the beginning of the year, and at $50.48 per share it is trading 24.3% below its 52-week high of $66.65 from February 2023. Investors who bought $1,000 worth of DocuSign's shares 5 years ago would now be looking at an investment worth $984.02.

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