What happened

Shares of DocuSign (DOCU 1.03%) gained 23.4% in January, according to data from S&P Global Market Intelligence. The e-signature company made its public debut last April, pricing its stock at $38 per share, and strong subscription revenue growth has helped propel its valuation up roughly 35% across the stretch despite volatility for the broader market.

DOCU Chart

DOCU data by YCharts.

DocuSign stock fell roughly 18% across 2018's volatile final quarter, and in the absence of any big, company-specific news, it's not surprising that the stock rebounded last month along with positive momentum for the market.

An illustration of a businessman signing his name.

Image source: Getty Images.

So what

DocuSign has a fast-growing business and appears to have a strong market position, but investors should also proceed with the understanding that it could face mounting competition. Dropbox announced on Jan. 28 that it had acquired HelloSign in a $230 million deal, and Adobe Systems continues to be a player in e-signatures and document management.

Even so, DocuSign has well-regarded product offerings, a first-mover advantage, and a large customer base that can create beneficial network effects. The company counts 10 of the top 15 financial services companies and 18 of the top global pharmaceuticals companies among its customer base.

Check out the latest DocuSign earnings call transcript.

Now what

DocuSign's momentum has continued in February, with shares trading up roughly 4.8% in the month so far.

DOCU Chart

DOCU data by YCharts.

In the near term, DocuSign looks poised to continue growing sales at a healthy clip. Revenue climbed 37% year over year in the September quarter to reach roughly $178 million, and management is guiding for sales of roughly $193 million in December's quarter.

Taking a more long-term vantage, the question is whether DocuSign's stand-alone solution will come to have less appeal over the long term as competitors offer e-signature as one facet of an encompassing document software suite. The stock could have big upside at current prices, but unfavorable twists and turns in the market could also present challenges. Shares trade at roughly 10 times this year's expected sales.