Why DocuSign Stock Dropped Today

Actions of DocuSign (DOCU -8.45%) fell 8.5% on Monday after Reuters reported that negotiations had stalled with two private equity firms as they weighed whether to acquire the online signature services company.

DocuSign acquisition talks have cooled

DocuSign shares have rebounded in recent weeks amid rumors that the e-signature leader was exploring a potential sale. Private equity firms Bain Capital and Hellman & Friedman emerged as potential suitors during the process. But according to three people “familiar with the matter” this week, Reuters says the companies' interest in reaching a deal has waned after weeks of negotiations “due to disagreements over how much they should pay” for the company .

What's next for DocuSign stock?

DocuSign has a market capitalization of just under $11 billion as of Monday's close, which could make its acquisition one of the largest leveraged buyouts in recent years. DocuSign has thrived during the pandemic as working from home accelerated the transition to electronic signature platforms. However, stocks have declined sharply since late 2021 as growth slowed. Even after rebounding nearly 40% from its 2023 low, DocuSign shares are down about 15% over the past year.

Overall, DocuSign will likely perform very well even if acquisition negotiations fail; the company's revenue growth has stabilized, with current forecasts implying 9% year-over-year growth in 2023. The company also appears to be on track to make its first-ever profit net over a full year.

But with hopes of a juicy acquisition premium fading, it's not surprising to see the stock pull back in response today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool ranks and recommends DocuSign. The Motley Fool has a disclosure policy.

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