DocuSign Inc. and the lesson to be learnt. (TL;DR at end)When the Covid pandemic began affecting many people throughout the workplace and in their homes, companies such as NASDAQ:MSFT , Zoom and NASDAQ:GOOGL began rapidly designing software to accommodate for this very new sprouting market that nobody had ever seen before. A whole line of business dedicated to allowing people to perform their work assigned tasks from anywhere in the world or from the comfort of their couch at home. Despite the major sell-off due to the pandemic and fears of complete economic collapse in some places, a number of people and companies became considerably wealthier. A prime example that I am writing about today is DocuSign and their virtual document signing services which are in competition with NASDAQ:ADBE .
There was a massive craze over this whole digital work idea and many investors believed it was a "money-pot" for a future dominating market. Many investors began pumping money into such companies for long and short term investments. The thought behind it being, "people prefer working this way and now that they have used it, they'll never go back". This mentality obviously allowed companies like DocuSign to advance in price dramatically, because how else are you supposed to sign off a document on a desktop for instance. Despite the thought process seeming "sound", there was one major downfall.
The anticipated growth for a company like DocuSign and other competitors was astronomical. But, as Covid restrictions began to ease up slightly between the time of the announcement of the Delta variant and then Omicron, many people realised that they didn't quite enjoy working from home and/or owners of companies brought many employees back into the workplace, sales for products provided by a company like DocuSign slipped and this sent shivers through countless investors' spines as they realised how overpriced the company may have actually been in comparison to its inherent value. Needless to mention, DocuSign announcing that the "pandemic boom" in business was slowing down after they presented their slipping sales did not help in any which way, shape, nor form. This resulted in a horrific sell-off of countless stocks causing price a catastrophic price drop (especially for traders) of around $100 in Docusign and major price drops with their competitors. Consequently, Adobe had a stock price drop too as investors lost faith in their ability to maintain growth in sales (From $698 all the way through to $616 (at the time of writing)).
Now there is one major lesson to be learnt regarding this scenario and like so many before it. Deciding to become a shareholder in a company due to the potential in their industry and their presence within it alone can end horrifically. Especially when the media "hypes up" such companies resulting in horrific over-evaluations. One must perform their own investigation into the safety of such company regardless of how long you plan on holding their stock for. There is no point in putting money into a company that may not be profitable or the management consists of a number of incompetent monkeys for instance just because everybody is talking about it. You must perform your own investigation and create your own judgement on whether this company is actually worth your time. As an investor or trader, you must be careful, now as much as ever. There are countless startups having their prices floated by the media and the public's attitude towards the company which inevitably come crashing back down, even though all that could be avoided if the investor/trader actually held back until they deemed the price "acceptable or attractive" for the company.
As always, further opinions, facts and news that I may not be aware of are always welcome in the comments, it is always good to bounce ideas off of others, so comment away!
TL;DR: The work from home craze at the beginning of the pandemic ('hyped' by the media) caused many to pump money into companies that would later lose business as many returned to the workplace or their financial infrastructure was realised to be dysfunctional. One must do their own homework into companies and only pay a suitable price for the stock they're getting.
