DocuSign Stock: A Tale of Two Clouds

Documentary Sign (DOCU -0.48%) It has tremendous potential as a comeback stock. It boomed at the height of the pandemic when businesses needed online solutions to fulfill contracts. Although this need has diminished since the lockdown ended, the company has proven that electronic signatures are here to stay.

According to Fortune Business Insights, the online signature market will enjoy a compound annual growth rate (CAGR) of 35% through 2030, while the document management industry is expected to grow at a CAGR of 17% during the same period. This represents tremendous potential for DocuSign and its industry.

The company hopes to leverage this growth more fully through its document ecosystem called DocuSign Agreement Cloud. Unfortunately for shareholders, one significant uncertainty is casting a dark cloud over the company’s future. The question for investors is which “cloud” should be the deciding factor for DocuSign stock.

#1 Cloud: DocuSign Contract Cloud

DocuSign stock has lost most of its value since the pandemic-induced boom ended. With the end of lockdown, businesses can once again conclude contracts on paper. Additionally, the following companies adobe and drop box The competition has begun. All these factors have dampened enthusiasm for the stock.

Nonetheless, one service that can strengthen your competitive advantage is DocuSign Agreement Cloud. Instead of simply creating contracts and collecting signatures, Agreement Cloud creates a document ecosystem around what it calls “document lifecycle management.”

After the parties have entered into a contract, the contract cloud stores the documents and makes them easily accessible when the parties need to retrieve the contract. This can help organizations with compliance issues and help ensure contracts are up to date when it’s time for renewal.

Moreover, documents play a very important role in our lives. Knowing this, users may feel more comfortable working with a ‘document company’ rather than a software or cloud company that happens to be in the document market. And this could also strengthen DocuSign’s competitive advantage.

These factors could also help stocks that have gained little traction due to slowing growth since lockdowns ended. Still, with the stock’s forward price-to-earnings (P/E) ratio of 18, investors could see it as a bargain if Contract Cloud can reinvigorate growth.

Cloud No. 2: Cloud determines the future of DocuSign

Unfortunately, the stock is suffering from other clouds hovering over its future. The decline in the stock has led to a dramatic increase in buying interest from private equity funds, particularly Bain Capital and Hellmann & Friedman.

Nonetheless, talks appear to have stalled, raising significant doubts about DocuSign’s future direction. That uncertainty extends to investors. If the deal closes, investors will likely experience a one-time share price increase before the deal is shut down. However, if the deal does not materialize, the price of the Software-as-a-Service (SaaS) stock will likely fall as traders hope to profit by buying.

The specter of buying is a distraction even for long-term investors. Those lucky enough to buy for less than $40 a share at the end of 2023 will at least make a profit. Those who bought at the high price of $200 per share at the end of 2021 have lost all hope of recovering their investment.

And all long-term shareholders lose shares that could potentially be recovered if the shares remain on the public market. So until DocuSign’s future becomes more certain, investors are left wondering whether the stock is a long-term investment or simply a bargain.

Which cloud should investors pay attention to?

Unfortunately for investors, the future of the cloud is likely to have more of a near-term impact on stocks. DocuSign’s current situation makes the stock a bet on its buyability, making it difficult to argue that the company is an investment.

However, as interest in acquisitions decreases and the company moves forward as an independent company, investor interest will begin. DocuSign is the market leader in online signatures and document management, and Agreement Cloud can help you outpace your competitors. These conditions can result in stocks that beat the market over time.