Skip to main content
hello world

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.

If You Bought 1 Share of DocuSign at Its IPO, Here's How Many Shares You Would Own Now

Motley Fool - Sun Oct 6, 6:11AM CDT

A stock split is always a piece of market-shaking news for a publicly traded company. This classic piece of financial engineering is usually a sign that a stock has grown so popular, its per-share price has to be reduced enough to avoid sticker shock.

Bearing that in mind, let's take a look at how a shareholding in DocuSign(NASDAQ: DOCU) has changed since the e-verification specialist's 2018 IPO. We'll try a pop quiz -- how many shares would you now hold if you had acquired a single one of the company back then?

Very low share count growth

That's a trick question, sorry (I couldn't resist). DocuSign has never enacted a stock split since its IPO, so one share bought back then would stand at one now. A split might have been a consideration earlier this decade, when the company's stock price topped $300 per share at one point.

These days it's only $61 and change, and that's not completely surprising. It's considered to be something of a maturing business, and in the tech sector such enterprises generate less excitement than young companies posting monster sales growth (despite the usual accompaniment of significant bottom-line losses).

Compounding that, DocuSign doesn't operate in a cool segment of the industry. The core way it earns its living is document verification, which no matter how cutting-edge and useful probably isn't a compelling "story" for many individual and institutional investors.

Something of a sleeper

That's a shame, because DocuSign has been posting some very satisfying numbers lately. This theoretically mature business still generated 7% year-over-year sales growth (to $736 million) in its most recently reported quarter, thanks in no small part to an 11% increase in customer count. Better, non-GAAP (adjusted) net income soared 34% higher to almost $201 million. Note the wide profit margin, meanwhile.

This is clearly a company that knows how to keep the growth engine going and profitability commensurately high. That, combined with a modest valuation -- forward P/E is only 16.6 -- makes it feel very much like a buy to me.

Should you invest $1,000 in Docusign right now?

Before you buy stock in Docusign, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Docusign wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $765,523!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Docusign. The Motley Fool has a disclosure policy.