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Dec. 4, 2021, 10:41 a.m. EST

Adobe worth $26 billion less as DocuSign fears spark ‘knee-jerk reaction’ for stock

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By Emily Bary

Shares of Adobe Inc. sank to their worst performance in more than 20 months Friday, after DocuSign Inc. delivered what some saw as a the latest sign of a demand cool-down for work-from-home software.

DocuSign /zigman2/quotes/205992027/composite DOCU -3.26% Chief Executive Dan Springer acknowledged Thursday that while his electronic-signature company saw “accelerated growth” for six quarters amid the pandemic, customers have gone back to “more normalized buying patterns.” As a result, DocuSign delivered a downbeat bookings outlook, sending its shares cratering more than 40% .

Some of that investor fear seemed to transfer over to Adobe /zigman2/quotes/200389143/composite ADBE -3.37% , which also offers contract-management software and allows for the collection of e-signatures. Adobe’s stock fell 8.2% Friday, its steepest single-day percentage drop since March 2020 and the worst performance on the day from an S&P 500 /zigman2/quotes/210599714/realtime SPX -0.38% stock. The move wiped away $26.3 billion in market capitalization, taking Adobe’s valuation lower than $300 billion.

The decline in Adobe shares struck Wedbush analyst Daniel Ives as a “DOCU-related selloff,” he told MarketWatch, as DocuSign’s report served as a “a barometer that the WFH tailwinds are now abating and could be a headwind for Adobe.”

“The DOCU print was a shocker and this is a knee-jerk reaction,” he said.

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Adobe is due to post its own quarterly results Dec. 16. The company highlighted its e-signature technology in its prior earnings report, as Chief Financial Officer John Murphy noted that “third-quarter Document Cloud growth drivers included adoption of Sign in Acrobat driven by the increased need to collaborate in a hybrid work environment.”

While other at-home stocks took a hit on disappointing outlooks earlier in the course of the pandemic, DocuSign initially appeared more resilient. Its stock hit an all-time high in September and was up 165% since March 2020 as of Thursday’s close. Now the company will need to “show that it can generate, not just fulfill, demand on a regular basis,” according to an Evercore analyst.

Adobe has a more diversified business than DocuSign. While the company sells contract-related software, it has a variety of other offerings including subscriptions to creative programs like Photoshop. Adobe’s Document Cloud accounted for about 13% of the company’s overall revenue in its last-reported quarter.

Shares of Adobe were up 86% since March 2020 as of Thursday’s close.

US : U.S.: Nasdaq
$ 57.22
-1.93 -3.26%
Volume: 3.85M
June 7, 2023 4:00p
P/E Ratio
Dividend Yield
Market Cap
$11.94 billion
Rev. per Employee
US : U.S.: Nasdaq
$ 418.32
-14.57 -3.37%
Volume: 4.77M
June 7, 2023 4:00p
P/E Ratio
Dividend Yield
Market Cap
$198.57 billion
Rev. per Employee
-16.33 -0.38%
Volume: 0.00
June 7, 2023 5:31p

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