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If You Had Bought DocuSign (NASDAQ:DOCU) Shares A Year Ago You'd Have Earned 192% Returns

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Simply Wall St
·3 min read
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When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. Take, for example DocuSign, Inc. (NASDAQ:DOCU). Its share price is already up an impressive 192% in the last twelve months. It's also good to see the share price up 24% over the last quarter. But this could be related to the strong market, which is up 12% in the last three months. We'll need to follow DocuSign for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for DocuSign

Because DocuSign made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

DocuSign grew its revenue by 44% last year. We respect that sort of growth, no doubt. While that revenue growth is pretty good the share price performance outshone it, with a lift of 192% as mentioned above. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. Of course, we are always cautious about succumbing to 'fear of missing out' when a stock has shot up strongly.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

DocuSign is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for DocuSign in this interactive graph of future profit estimates.

A Different Perspective

It's nice to see that DocuSign shareholders have gained 192% over the last year. That's better than the more recent three month gain of 24%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that DocuSign is showing 2 warning signs in our investment analysis , you should know about...

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.