Please ensure Javascript is enabled for purposes of website accessibility

Why Did DocuSign Stock Pop 5.5% Today?

By Rich Smith – Aug 13, 2020 at 3:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Insiders are selling out. And this is good news?

What happened

DocuSign (DOCU -0.52%) stock has been a fabulous performer for its shareholders, more than quadrupling in value over the past year. And it's up again today -- increasing 5.5% earlier in the day and still up 3.2% as of 3 p.m. EDT.

Curiously, though, the only news out on the wires concerning DocuSign doesn't seem to be of the good variety.

A cartoon of a man using a stylus to sign his signature on a giant smartphone

Image source: Getty Images.

So what

In a Form S-3 filed with the Securities and Exchange Commission yesterday, DocuSign advises that owners of Liveoak Technologies, the online notarization subsidiary that DocuSign acquired last month, have filed to sell 247,030 of the DocuSign shares that they received in payment for their shares of Liveoak during the acquisition.  

Only Liveoak shareholders are selling DocuSign shares. DocuSign itself is not issuing and selling any new shares, and so will receive no portion of the sales price. Thus, this seems a clear-cut case of insiders selling out.

Now what

But doesn't that bode poorly for DocuSign's prospects? I mean, if owners of the stock -- however they came into possession of said stock -- were confident in DocuSign's prospects for continued growth, it would make sense for them to hold onto their shares rather than sell, right?

But they aren't, so perhaps they ... don't have such confidence?

Perhaps -- mind reading is hard business. But also, maybe the reason outside investors aren't following insiders' lead and selling their DocuSign shares today is because when insiders sell out, they're only selling shares that already exist. Conversely, when a company sells its own shares, it has to create them first, diluting existing shareholders' stake in the company.

At the very least, DocuSign isn't doing that. And in that respect, today's news actually is kind of good.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends DocuSign. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DocuSign Stock Quote
DocuSign
DOCU
$45.79 (-0.52%) $0.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.