CrowdStrike Holdings (NASDAQ:CRWD), DocuSign (NASDAQ:DOCU), and Beyond Meat (NASDAQ:BYND): What do a cybersecurity specialist, a verifier of online e-signatures, and a maker of plant-based meat substitutes have in common?
Not much, at first glance, aside from the fact that all three saw their stock prices drop to close out the week today. In Friday trading, CrowdStrike stock, which had been down 5% earlier in the day, clawed back enough losses to close down only 2.4%. DocuSign shares, which had been down 6%, pared its losses to close 3.9% lower. Beyond Meat did worst of all, ending the day down 5.7%.
Only DocuSign had anything approaching what you might call "bad news" to report. In a Form 4 filing with the Securities and Exchange Commission on Thursday night, chief operating officer Scott Olrich revealed that on Wednesday, he sold a total of about $1.2 million worth of DocuSign stock -- 5,800 shares in all, at prices ranging from $206.89 to $214.40.
That might not be so disturbing if DocuSign stock was selling near its highs for the year, in which case the COO might be seen as just taking a few chips off the table, part of a bet that was still heading higher. But DocuSign shares are in fact down 26% from their highs hit on Sept. 1. Seeing the COO sell in the middle of a downturn in share price appears to have unnerved some investors today.
As for CrowdStrike and Beyond Meat, there was no negative news at all out today. Here, I suspect we're seeing just a continuation of the negative sentiment surrounding unprofitable, or barely profitable, Nasdaq-listed equities that began late last week, and has continued almost interrupted through this week as well. Over the past five trading days, the Nasdaq has traded lower four times, including today's decline of 0.6%, as investors begin to wonder whether tech stocks have run up too far, too fast, before proving their ability to earn sustainable profits.
The growth story still seems intact for all three stocks, each of which saw sales grow in the strong double digits in their most recent quarterly reports. Even so, if this crisis of confidence about profits continues among tech investors, then CrowdStrike, with no history of profits and a forward price-to-earnings ratio of 2,000; DocuSign, similarly unprofitable on a trailing-12-month basis and trading for 357 times forward earnings; and even Beyond Meat, which is profitable over the past year but costs nearly 500 times those trailing-12-month earnings, could be vulnerable to further declines next week.