DocuSign Stock Poised To Rally Further As It Touches New Highs?

DocuSign stock (NASDAQ: DOCU) has gained about 2% last week while rallying by almost 20% over the past month, following its solid Q1 FY’22 earnings report (FY ends Jan 31). DocuSign saw revenues rise 58% year-over-year to $469 million, with margins also expanding. The company also provided a stronger than expected outlook for the full year, indicating that its e-signatures tools are here to stay even post the pandemic, as businesses move away from physical documents to more seamless digital solutions that help to sign and manage documents.

So will DocuSign stock continue to trend higher over the coming weeks and months, or is a correction looking more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, returns for DocuSign stock average 5.6% in the next month (21 trading days) after experiencing a 2% gain over the last five trading days. The stock is also likely to outperform the S&P 500 over the next month, with an expected return that would be 4.3% higher compared to the S&P 500.

But how would these numbers change if you are interested in holding DocuSign stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test DOCU stock chances of a rise after a fall and vice-versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF DOCU stock moved by -5% over 5 trading days, THEN over the next 21 trading days, DOCU stock moves an average of 5.3%, with a 69.1% probability of a positive return over this period.

Also, given a -5% movement for the stock over 5 trading days, it has historically witnessed an excess return of 3.7% compared to the S&P500 over the next 21 trading days, with a 62.5% percent probability of a positive excess return.

Some Fun Scenarios, FAQs & Making Sense of DOCU Stock Movements:

Question 1: Is the average return for DocuSign stock higher after a drop?

Answer:

Consider two situations,

Case 1: DocuSign stock drops by -5% or more in a week

Case 2: DocuSign stock rises by 5% or more in a week

Is the average return for DocuSign stock higher over the subsequent month after Case 1 or Case 2?

DOCU stock fares better after Case 1, with an average return of 5.3% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 5.2% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise

Try the Trefis machine learning engine above to see for yourself how DocuSign stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold DocuSign stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For DOCU stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although DOCU stock appears to be an exception to this general observation.

DOCU’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Looking for reasonably valued software stocks with big room to grow? Check out our theme on Mid-Cap SaaS Stocks

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