Plummeting DocuSign Stock Slammed with Downgrades

The stock is on track for its worst day ever

Assistant Editor
Dec 3, 2021 at 10:30 AM
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DocuSign Inc (NASDAQ:DOCU) is down 36.8% to trade at $48.02 at last glance, on track for its worst day ever, after posting disappointing fourth-quarter sales guidance. The company also reported third-quarter losses of 58 cents per share after the close yesterday, which is much lower than the anticipated earnings of 46 cents per share.

It's no surprise how analysts have chimed in. Piper Sandler, J.P. Morgan Securities, and Wedbush all downgraded DOCU to "neutral," while Needham cut its rating "hold" from "buy." The stock received no fewer than three price-target cuts as well. 

Today's nosedive has DocuSign stock trading at fresh annual lows, and below all short- and long-term moving averages. The stock is also dropping below its year-to-date breakeven, while the volatile price action landed DOCU on the Short Sale Restricted (SSR) list today. 

Options traders have been quick on the draw this morning. So far, 81,000 calls and 100,000 puts have crossed the tape, with total options volume running at 36 times the intraday average. The weekly 12/3 140- and 135-strike puts are the most popular, with new positions opening at both. 

This penchant for puts is nothing unusual of late, as per DOCU's 10-day put/call volume ratio of 1.41 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 98% of readings from the past year, showing puts being picked up at a much faster-than-usual rate.

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