5 Pandemic Stocks That Are Losing Value

3. DocuSign, Inc. (NASDAQ:DOCU)

Number of Hedge Fund Holders: 49

Loss in Share Price Over 6 Months as of March 1: 59.98%

DocuSign, Inc. (NASDAQ:DOCU) is a California-based company that provides e-signature solutions, allowing businesses and individuals to digitally prepare and sign agreements. The stock gained significant traction during the pandemic, when companies conducted a majority of their business online and utilized DocuSign, Inc. (NASDAQ:DOCU)’s services to manage contracts. 

DocuSign, Inc. (NASDAQ:DOCU) declined almost 60% in value over the last six months. Investors sold the stock in December as Q3 results missed expectations, with guidance for Q4 also missing estimates, indicating that the COVID-19 boom for the company was over, since the remote working trend is slowing after lockdowns are lifted. DocuSign, Inc. (NASDAQ:DOCU) has also dropped due to the broader sell-off in SaaS stocks, as investors lower exposure to high growth stocks amid rising rates and a tighter monetary policy.

Morgan Stanley analyst Stan Zlotsky downgraded DocuSign, Inc. (NASDAQ:DOCU) on December 16 to Equal Weight from Overweight with a price target of $165, down from $350. The company’s Q3 results altered his thesis around the durability of growth amid tough comps post-COVID, said Zlotsky, who thinks it will likely take time to refocus on the pre-pandemic basics of selling, build the pipeline, and convert that into growth. The company’s management is also conservative on its Q4 and 2022 guidance. 

According to the Q4 database of Insider Monkey, 49 hedge funds were bullish on DocuSign, Inc. (NASDAQ:DOCU), down from 51 funds in the previous quarter. Tiger Global Management is the largest stakeholder of the company, with approximately 7 million shares worth more than $1 billion. 

Here is what Polen Focus Growth has to say about DocuSign, Inc. (NASDAQ:DOCU) in its Q4 2021 investor letter:

“We opportunistically purchased a new position in DocuSign amid what we believe is a short-term execution issue. DocuSign dominates the market for electronic signatures and is expanding into adjacent areas like contract lifecycle management, AI-based contract analysis, and e-notary services.

It has 1.1 million customers, including over 160,000 large enterprise and commercial customers. DocuSign’s business consists of almost entirely subscription-based revenue with over 120% net revenue retention rates currently. The business is also profitable and cash generative.

DocuSign has over 350 pre-built integrations with many of the most important software applications from Microsoft, Salesforce.com, Workday, and many others. Their e-signature product is embedded into applications that people use every day. E-signatures were already beginning to replace “wet” signatures pre-COVID but substantially accelerated as workforces became mostly remote in 2020. Once businesses move to e-signatures, they typically do not go back.”