Stay-at-home stocks are once again in focus as the Northern Hemisphere grapples with a potential second wave of the novel coronavirus. DocuSign (NASDAQ:DOCU) is one such company whose e-signature platform is making working from home a much easier process. DOCU stock has been a rockstar in the weeks following the March stock market crash, but that’s caused some to question whether the firm is overhyped.
A closer look at the buy-case for DocuSign suggests this company is a great long-term play — especially right now.
DocuSign is best-known for its ability to capture electronic signatures, allowing businesses to complete deals from anywhere in the world. That technology has never been more useful than during a pandemic, which has caused bears to question whether DOCU stock’s impressive growth can continue.
But e-signature technology is just the tip of the iceberg for DocuSign. The firm’s platform actually aims to do much more than that.
That means the many companies that have signed on to support a temporary work-from-home environment might find themselves depending on DocuSign’s ecosystem and renewing in the months to come.
DOCU Stock Is More Than a Work From Home Play
The biggest mistake bears are making is to lump DOCU stock in with work-from-home companies like Zoom (NASDAQ:ZM). The two are similar in that their offerings support remote work and their stocks exploded during the pandemic, but the similarity ends there. Whereas Zoom’s video conference technology requires users to be separate in order to have a use-case, DocuSign has a value proposition outside of remote work. Its e-signature capability is just the icing on the cake that makes closing deals around the world possible.
The firm has been working to build out its offerings into a full-service contract maintenance program. DocuSign’s acquisition of Seal Software adds Artificial Intelligence to its suite of services and could be a major selling point. Seal’s technology leverages AI to analyze contracts, saving users both time and money. The software claims to be capable of reviewing 25,000 contracts in five days.
If we are facing a severe economic downturn as some are expecting, that kind of cost savings on legal fees will be a huge selling point for DocuSign.
Cloud Contracts Will Retain Users
Analyzing contracts via an AI platform is part of DocuSign’s master plan: the Agreement Cloud. DocuSign’s ultimate goal will be overseeing a company’s contracts from planning to renewal. The firm has picked up a handful of other tech firms like Seal that focus on contract management, enabling DocuSign to make creating and managing contracts more efficient for a wide range of industries.
It’s that ultimate end-goal that makes DOCU stock a valuable long-term play, especially on pullbacks. The assumption that DocuSign will see demand fall once employees return to work seems unlikely considering the value the company’s software offers.
Having the ability to complete contracts quickly and efficiently, even if one signatory is remote, is a huge benefit in any sales situation.
The Bottom line on DocuSign
With any equity that has seen a massive run-up like DOCU stock, there’s a risk of increased volatility. In the short term, DocuSign may see some ups and downs as investors jump in and out of supposed stay-at-home stocks on pandemic news.
But ultimately, DocuSign is much more than just a pandemic play. The company will continue to flourish in the years ahead as it realizes its potential and continues building out the Agreement Cloud. That means any pullbacks in DOCU stock’s price are good times to pick up shares and continue building a position in this long-term winner.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.
