Docusign Stock Tumbled 20% – Opportunity or Trap?
Docusign (DOCU) stock has fallen by 20.1% in less than a month, from $85.01 on 9/18/2025 to $67.91 now. Should you buy this dip? Dip buying is a viable strategy for quality stocks that have a history of recovering from dips.
As it turns out, DOCU stock passes basic quality checks. But the bad news it that the stock has returned (median) -26% in one year, and 31% as peak return following sharp dips (>30% in 30 days) historically. For quick background, DOCU provides e-signature and contract lifecycle management solutions that digitally prepare, sign, manage agreements, and automate workflows, delivered via direct, partner-assisted, and web-based sales.
For details on stock fundamentals and assessment: Read Buy or Sell Docusign Stock to see the full picture.
DOCU stock has fallen meaningfully recently and we currently find it fairly priced. This may feel like a caution, and there is significant risk in relying on a single stock. However, there is a huge value to a broader diversified approach. If you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio (HQ) – HQ has outperformed its benchmark – a combination of S&P 500, Russell, and S&P midcap index, and achieved returns exceeding 105% since its inception. Risk management is key – consider, what could long-term portfolio performance be if you blended 10% commodities, 10% gold, and 2% crypto with HQ’s performance metrics.
- Earn 9.4% Today or Buy CROX 40% Cheaper – It’s a Win-Win
- Triggers That Could Ignite the Next Rally In Applied Materials Stock
- Palantir Technologies Stock Can Sink, Here Is How
- Cash Machine Trading Cheap – Webull Stock Set to Run?
- High Margins, 43% Discount: Buy Adobe Stock Now
- Ten-Year Tally: Accenture Stock Delivers $60 Bil Gain
Historical Median Returns Post Dips
| Period | Past Median Return |
|---|---|
| 1M | 14.3% |
| 3M | -1.3% |
| 6M | -12.5% |
| 12M | -26.0% |
Historical Dip-Wise Details
DOCU had 5 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered
- 31% median peak return within 1 year of dip event
- 30 days is the median time to peak return after a dip event
- -42% median max drawdown within 1 year of dip event
| 30 Day Dip | DOCU Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | DOCU | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | -26% | 31% | -42% | 30 | ||||
| 9262022 | -30% | -14% | -20% | 31% | -23% | 129 | ||
| 5092022 | -32% | -12% | -27% | 31% | -42% | 30 | ||
| 3112022 | -32% | -3% | -26% | 50% | -47% | 24 | ||
| 12032021 | -52% | -0% | -69% | 16% | -71% | 20 | ||
| 10082018 | -34% | 1% | 55% | 50% | -13% | 364 | ||
Docusign Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 8.3% | Pass |
| Revenue Growth (3-Yr Avg) | 9.8% | Pass |
| Operating Cash Flow Margin (LTM) | 33.6% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 134.6 | |
| => Cash To Interest Expense Ratio | 389.5 |
Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.