DocuSign stock price at risk of a steep crash after earnings on March 17

DocuSign stock price has pulled back in the past few months, and is hovering at its lowest level since December 2023.

DOCU was trading at $47 on Friday, down by 56% frm its highest point in December 2024.

It has also plunged by over 85% from its highest point during the pandemic. So, will the stock rebound after its earnings on Tuesday?

DocuSign to publish its earnings on Tuesday 

DocuSign, a company that provides e-signature solutions, has faced major headwinds in the past few years as its growth trajectory waned after the pandemic.

The stock will be in the spotlight this week as the company publishes its financial results on Tuesday.

Data compiled by Yahoo Finance shows that Wall Street analysts expect that its revenue will be $828 million, up 6.70% YoY. 

If analysts are accurate, this revenue will bring its annual revenue to $3.21 billion, up by 7.86% YoY.

In the past, DocuSign was experiencing double-digit revenue growth as demand for its signature solutions waned.

Wall Street analysts also expect that its earnings-per-share (EPS) will come in at 95 cents, up from 86 cents in the fourth quarter of 2024.

Its annual EPS is expected to come in at $3.78 from the previous $3.55.

The most recent results showed that DocuSign’s business continued its modest growth in the third quarter. Its revenue rose by 8% to over $818 million YoY.

It jumped from the previous quarter’s $801 million, with most of this growth being driven by subscriptions.

On the positive side, DocuSign has become a highly undervalued company, with its forward price-to-earnings (PE) ratio falling to 12.4, much lower than the technology sector median of 21.

Its forward PE ratio is much lower than the five-year average of 45. The S&P 500 Index has a forward PE multiple of 23. 

More data shows that the company is highly undervalued, with the forward price-to-earnings-to-growth (PEG) ratio being 0.51, much lower than the sector median of 1.24.

However, the popular Rule-of-40 metric shows that the company is relatively overvalued.

It has a forward revenue growth of 9% and a profit margin of 9.5, giving it a multiple of 18.5%. 

Analysts have a muted outlook for the company, with Jefferies downgrading it from a buy to hold and moved its price target from 105 to 45.

DocuSign stock price technical analysis 

DOCU stock chart | Source: TradingView 

The weekly chart shows that the DOCU  stock price has come under pressure in the past two years, falling from a high of $108 in December 2024 to the current $47.

It has dropped below the crucial support level at $67, its lowest level on April 7 last year.

DocuSign share price has remained below the 50-week Exponential Moving Average (EMA) and is nearing the key target at $38.70, its lowest level in October 2023.

A break below that level will point to more downside, potentially to the psychological level at $30.