Adobe stock stumbles toward worst day in 20 months as DocuSign fears spark ‘knee-jerk reaction’ – MarketWatch

Shares of Adobe Inc. are sinking Friday, and on track for their worst performance in more than 20 months, after DocuSign Inc. delivered what some saw as a the latest sign of a demand cooldown for work-from-home software.

DocuSign DOCU, -42.61% Chief Executive Dan Springer acknowledged Thursday that while his electronic-signature company saw “accelerated growth” for six quarters amid the pandemic, customers have gone back to “more normalized buying patterns.” As a result, DocuSign delivered a downbeat bookings outlook, sending its shares cratering 40%.

Some of that investor fear seems to be transferring over to Adobe ADBE, -9.19%, which also offers contract-management software and allows for the collection of e-signatures. Adobe’s stock is off 9.4% in Friday afternoon trading and on pace to log its steepest single-day percentage drop since March 16, 2020, when it lost 14.8%. Adobe is pacing S&P 500 SPX, -1.43% laggards Friday.

The decline in Adobe shares struck Wedbush analyst Daniel Ives as a “DOCU-related selloff” as DocuSign’s report served as a “a barometer that the WFH tailwinds are now abating and could be a headwind for Adobe,” he told MarketWatch. “The DOCU print was a shocker and this is a knee-jerk reaction.”

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Adobe is due to post its own quarterly results Dec. 16. The company highlighted its e-signature technology in its prior earnings report, as Chief Financial Officer John Murphy noted that “third-quarter Document Cloud growth drivers included adoption of Sign in Acrobat driven by the increased need to collaborate in a hybrid work environment.”

While other at-home stocks took a hit on disappointing outlooks earlier in the course of the pandemic, DocuSign initially appeared more resilient. Its stock hit an all-time high in September and was up 165% since March 2020 as of Thursday’s close. Now the company will need to “show that it can generate, not just fulfill, demand on a regular basis,” according to an Evercore analyst.

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FactSet, MarketWatch

Adobe has a more diversified business than DocuSign. While the company sells contract-related software, it has a variety of other offerings including subscriptions to creative programs like Photoshop. Adobe’s Document Cloud accounted for about 13% of the company’s overall revenue in its last-reported quarter.

Shares of Adobe were up 86% since March 2020 as of Thursday’s close.