Shares of e-signature software maker DocuSign, Inc. (DOCU) fell nearly 1.8% during the early hours of trading on Tuesday, after CEO Dan Springer announced his departure effective immediately. Shares closed at $59.55, 81% off from their all-year high of $314.76.
Meanwhile, the Board of Directors has decided to appoint Chairman Mary Agnes “Maggie” Wilderotter as interim CEO, while a leading national executive search firm helps in finding a suitable candidate for the role. Maggie will also continue as the Chairman of DOCU.
Springer joined DocuSign as CEO in 2017 and was instrumental in taking the company public in 2018. Since then, the company’s stock price has gained almost 50% over the last five years under his stewardship.
Notably, the COVID-19 pandemic proved a massive accelerator for the company’s e-signature products, as people locked up at home could deliver on their commitments and sign new deals online.
However, as the pandemic faded and people started venturing out, demand slowed down, and the financials weakened. DOCU’s Q1FY23 results were mixed and gave dwindling signs for the future.
On leaving his role, Springer said, “Helping to build DocuSign and lead a world-class team over the last five years has been the work of my life… What we’ve accomplished will help the company take advantage of a massive market opportunity for future growth.”
Meanwhile, Wilderotter, who boasts extensive experience and is also on the Boards of several companies, stated, “I’m excited to lead DocuSign in this new capacity as we focus on helping our customers maximize the market opportunity that comes with the digital transformation of agreements worldwide… I look forward to improving execution and continuing to drive profitability at scale for our company with the talented and capable DocuSign team.”
Wall Street’s Take
Surprised by Springer’s exit, Needham analyst Scott Berg reiterated a Hold rating on DOCU stock and said, “this change adds a new intermediate-term risk on a new management team driving even more operational changes that may push out a return to normalcy well into FY24.”
Berg noted that bringing post-pandemic changes to sales and operations will require more time than people expect, and hence Springer’s exit could be comprehended. Moreover, Berg believes that the changes reflect the heightened internal struggles of navigating through, and “fresh management oversight and strategy is preferred to drive through these execution challenges.”
Other analysts on the Street also resonate with Berg’s opinion and have given the DOCU stock a Hold consensus rating based on four Buys, nine Holds, and two Sells. The average DocuSign price forecast of $76.46 implies 28.4% upside potential to current levels. Meanwhile, the stock has lost 62.1% so far this year.
TipRanks Stock Investors tool shows that investor sentiment is currently Negative on DocuSign, with 1.2% of portfolios tracked by TipRanks reducing their exposure to DOCU stock over the past 30 days.
DocuSign’s CEO leaving puts the company in a vulnerable spot until a suitable successor is found. Who will steer the sinking ship, and when will it come out of the rough sea? It will be worth watching. For now, all factors are working against DocuSign.