What happened
Shares of DocuSign (DOCU +0.26%) continued to drop today after the company reported worse-than-expected first-quarter results last week. Investors were likely also reacting to an analyst downgrading the tech stock and cutting its price target.
DocuSign's stock price was down by 10.8% as of 10:55 a.m. ET on Monday.
So what
Investors kept their pessimistic view of DocuSign today after the company's report of adjusted earnings of $0.38 for the first quarter, which significantly missed Wall Street's consensus estimate of $0.46. That miss sent DocuSign's share price plummeting 25% on Friday.
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Making matters worse for shareholders was the fact that DocuSign also significantly cut its guidance for fiscal 2023 billings. Management now expects billings to be $2.53 billion at the middle of its guidance range, down from the previous outlook of about $2.71 billion.
Technology investors have been increasingly focused on company earnings as they worry about the potential for the U.S. economy to enter a recession. And with DocuSign cutting its billings guidance and missing analysts' consensus earnings estimate, shareholders weren't convinced that the company is on the right track.
NASDAQ: DOCU
Key Data Points
Adding to their pessimism is the fact that Wolfe Research analyst Alex Zukin cut his rating for DocuSign's stock to underperform and lowered his price target for its shares from $75 to $50. Zukin said he is concerned about the company's billings guidance, and investors noticed his skepticism.
Now what
DocuSign's recent sell-off doesn't mean the company isn't a good long-term investment, but investors might want to prepare for some more price swings. The broader market is still tumbling as investors' fear of a possible recession grows.
Tech stocks often feel the brunt of investor worries, and with DocuSign missing expectations in the latest quarter, there's little for the company's shareholders to be excited about right now.
