Shares of leading e-signature and agreement management platform DocuSign (DOCU 2.25%) are down 16% this week as of noon ET on Thursday, according to data provided by S&P Global Market Intelligence.
This decline stems from artificial intelligence behemoth OpenAI launching DocuGPT -- an AI solution with similar capabilities to DocuSign -- on Tuesday.
Experiencing most software stocks' worst nightmare, DocuSign saw its shares plummet this week. However, I don't believe it is necessarily a death knell for the well-established firm.
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DocuSign: A true battleground stock
On one hand, OpenAI's release of DocuGPT instantly creates a viable competitor for e-signatures and the broader contract (or agreement) process as a whole -- DocuSign's exact niche.
On the other hand, saying DocuSign has deeply entrenched itself in its niche is almost an understatement. Used by 95% of the Fortune 500, DocuSign has more than 1.7 million customers and over 1 billion users.
Thanks to this massive customer base -- and the company's partner ecosystem that includes almost every big tech company (minus OpenAI at this point, I'm guessing) -- DocuSign has years' worth of relationships and trust built up with its allies.
That won't be shaken up overnight by DocuGPT.
That said, DocuGPT isn't just trying to disrupt the e-signature niche, but is coming right after DocuSign's Intelligent Agreement Management (IAM) platform, which was supposed to be its next wave of growth.
Offering more intuitive solutions like obligation management, workflow automation, agreement preparation, AI-assisted review, and renewal management, the IAM platform's capabilities now have direct competition from DocuGPT.
While DocuSign won't immediately fade into obscurity, I'd rather watch from the sidelines due to this threat of AI disruption and the company's immense stock-based compensation, which equals 20% of sales.
