DocuSign Stock Forecast

Docusign Stock Forecast: Business has gone digital, and that means big gains in efficiency. Among other benefits, the costs of developing and storing paper documents have decreased substantially. Instead of passing paper forms and contracts from person to person, then finding an efficient way to index and house them, many organizations now rely on software platforms specifically designed to manage these tasks.

The best services offer a comprehensive suite of document-related solutions, including tools to generate documents quickly, options for electronic signatures, and easy management of contracts throughout their entire lifecycle. It’s faster, less expensive, and better for the environment than paper-based alternatives.

Though some business leaders were slow to embrace the trend towards digital documents, the concept is now mainstream. After years of fine-tuning, today’s services have demonstrated that they can provide efficient, secure methods of sharing information, and some of the companies that pioneered this technology have gone public. DocuSign was one of the first to see its products in mainstream use, and today’s investors are wondering, is now the time to buy?

DocuSign Makes Electronic Signatures Easy

When DocuSign [NASDAQ: DOCU] was founded in 2003, the future of digital contracts was anything but certain. It took years of courtroom testing to establish that in fact, electronic signatures carry the same weight as their more traditional pen-and-paper counterparts. Once the company cleared this legal hurdle, it focused on growing its market share.

By 2010, DocuSign had integrated its services with mobile technology, and the end of that year marked the processing of its 80 millionth signature. When DocuSign held its IPO in 2018, investors were anxious to get on board. In the first day of trading, share prices increased by more than 30 percent. They have since continued to climb, generating solid returns for early shareholders.

DocuSign was one of the first to get electronic signatures into mainstream use, but that isn’t all the company does.

It has a full menu of document management services that can be customized to meet business and industry needs. Better still, the platform is designed to allow for integration of complementary tools and services, so many companies discover they don’t have to throw out their existing processes to make the transition to digitization of documents.

The benefits of integrating DocuSign into document and contract management are clear and undisputed. On average, users save $36 per document as compared to paper-based alternatives. Transactions are completed an average of nine days faster when digital signatures replace paper versions, and 82 percent of all agreements that go through the DocuSign platform are executed within a single day.

All of that sounds great, but what does it mean for shareholders? Does the company still have room to grow? In other words, is DocuSign a buy?

Is DocuSign a Buy?

From January to December 2019, DocuSign [NASDAQ: DOCU] shares gained 80 percent, and it’s easy to see why. The company boasts hundreds of millions of users, and it is ranked number seven on the list of top ten global technology companies.

For the quarter ending October 31, 2019, year-over-year billings increased by 36 percent, and revenues went up by 40 percent to a total of $249.5 million. That figure exceeded analysts’ expectations, boosting stock prices almost immediately. Most of the revenue (95 percent) comes from subscription fees, and the remainder is generated through professional services.

Year-over-year, the total customer count for third quarter grew by 24 percent, and the number of business and commercial customers increased by 30 percent.

DocuSign is focused on growing its subscription services to increase the number of paid customers, and it is specifically targeting increased use among commercial and industrial clients.

For the fourth quarter, DocuSign [NASDAQ: DOCU] is predicting revenues between $263 million and $267 million, and total revenue for the year is projected at $962 million – $966 million. Those figures represent an upward revision as compared to guidance given during the second quarter earnings call.

Overall, analysts agree that there is plenty of room for DocuSign to continue its upward trajectory. When averaged, 12-month forecasts indicate growth of 10.8 percent, with the most optimistic predicting a stock price increase of 21.3 percent and the most pessimistic expecting a decrease of 12.6 percent.

Of course, despite these positive predictions, no investment is without risk, and DocuSign has its fair share. What should investors consider before putting money into DocuSign?

What are the Risks of Buying DocuSign Stock?

The biggest risk facing DocuSign is competition from large rivals. Adobe is an established industry leader, and it is growing rapidly. It has electronic signatures in its sights, and it is likely to focus on taking over a large chunk of DocuSign’s market share.

There are also a few start-ups offering similar services, which may or may not present issues in the future. For the moment, the only one to watch is HelloSign, which was recently acquired by Dropbox. Because Dropbox has a solid grip on the document storage and sharing market, it may have some success in chipping away at DocuSign’s client base.

Finally, some analysts have expressed concern that DocuSign is currently overvalued. It’s share price is driven by expectations of impressive future profits, so there is a possibility that no matter how good financial results are in coming quarters, investors won’t see notable gains.