Docusign Stock Tumbled 21% – Opportunity or Trap?
Docusign (DOCU) stock has fallen by 20.7% in less than a month, from $70.43 on 22nd Dec, 2025 to $55.82 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 is that historically, the median return for the 12-month period following sharp dips was -26%, with median peak return of 31%. We define sharp dip as stock going down 30% or more, in less than 30 day period.
Below, we get into details of historical dips and subsequent returns.
Historical Median Returns Post Dips
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| 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) | 8.4% | Pass |
| Revenue Growth (3-Yr Avg) | 9.0% | Pass |
| Operating Cash Flow Margin (LTM) | 34.7% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 133.9 | |
| => Cash To Interest Expense Ratio | 355.9 |
Not sure if you can take a call on DOCU stock? Consider portfolio approach
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Individual picks are volatile but diversified assets offset each other. A multi asset portfolio helps you stay the course capture upside and reduce downside.
The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices