Zhitong Finance APP learned that after media reports that DocuSign Inc (DOCU.US), a provider of electronic signature and digital transaction solutions, was considering a sale, the company’s stock price once hit the largest increase in a year. The US stock market ended up rising by more than 12% as of Friday. Media reports, citing unnamed people familiar with the matter, said the company is working with investment advisers to explore the possibility of a leveraged buyout, but talks are still in the early stages.
As of the close of U.S. stocks on Friday, DocuSign’s total market value was approximately US$12.8 billion. "In accordance with company policy, DocuSign does not comment on market rumors or speculation," a company spokesperson said.
One of the darlings of the COVID-19 era, DocuSign's sales and stock price soared in 2020 as companies around the world increasingly needed to process more documents digitally with employees working remotely. DocuSign's main business is to provide electronic signatures and digital products based on contract agreements. These products were particularly popular during the global COVID-19 epidemic in 2020, because at that time global companies needed to process documents more digitally to adapt to the needs of employees working remotely; in addition, DocuSign also helps users sign and manage contracts digitally, thereby simplifying and accelerating the processing of various commercial agreements.
Anurag Rana, an analyst from Bloomberg Intelligence, said earlier this month that the company's recent revenue growth expectations have slowed to single-digit levels and may even enter the negative growth range, and the slowdown in economic growth in 2024 may delay any improvement in performance.
DocuSign went public in 2018 and has recently faced huge competitive pressure from Adobe (ADBE.US), a software services giant that provides popular products such as Photoshop. Adobe's file business processing products have a growing market share. Therefore, as the epidemic dividend has completely become a thing of the past and competition has become fiercer, investors have lost interest in DocuSign, which seems to be unprofitable, and its valuation has also been affected.
Back in 2022, the company named former Google executive Allan Thygesen as CEO to lead DocuSign's next chapter of growth. However, according to media reports in June, the company's performance is difficult to return to a strong growth curve. The company has also experienced at least two rounds of major layoffs this year.
Analyst Mark R. Murphy from JPMorgan, a major Wall Street bank, wrote earlier this month that while the market for online document services remains broad, DocuSign’s prospects may still face significant difficulties in the short term as the company struggles to find a sustainable performance growth track in the post-COVID-19 era while also dealing with key leadership changes and sales organization restructuring.
Following news of the potential sale, the company's shares rose as much as 15% to $64.76 on Friday, the largest one-day gain since December 2022. As of the close of U.S. stocks on Friday, the San Francisco-based company's stock price had soared more than 12%.
Rana, an analyst at Bloomberg Intelligence, said that the most likely buyer of DocuSign will be a large private equity buyer. He also emphasized that US software industry giant Salesforce Inc. Large companies such as Microsoft Corp. or Microsoft Corp. may be logical potential acquirers, but they may be too busy with other potential AI-related acquisitions to consider the deal in the short term.