If you bought DocuSign stock at the IPO, here’s how many shares you’d own now

A stock split is always market-shaking news for a publicly traded company. This classic piece of financial engineering is usually a sign that a stock has become so popular that its price per share must be reduced enough to avoid sticker shock.

With this in mind, let’s take a look at how a holding DocuSign (DOCU 1.37%) has changed since the e-verification specialist’s 2018 IPO. We’re going to try a pop quiz — how many shares of stock would you own now if you had purchased just one of the company back then?

Very low share growth

This is a tricky question, sorry (couldn’t help myself). DocuSign has not adopted a stock split since the IPO so that a share bought then would remain at one now. A split may have been considered earlier this decade, when the company’s stock price topped $300 a share at one point.

These days it’s only $61 and change, and that’s not entirely surprising. It’s considered a maturing business, and in the tech sector such ventures generate less excitement than young companies experiencing monstrous sales growth (despite the usual accompaniment of significant losses).

Additionally, DocuSign does not operate in a cool segment of the industry. The main way they make a living is document verification, which, however modern and useful, is probably not a compelling “story” for many individual and institutional investors.

Something asleep

That’s a shame, because DocuSign has been posting some very solid numbers lately. This theoretically mature business still generated 7% year-over-year sales growth (to $736 million) in its most recently reported quarter, thanks in large part to an 11% increase in customer numbers. Better yet, non-GAAP (adjusted) net income rose 34% more to nearly $201 million. Note, meanwhile, the wide profit margin.

This is clearly a company that knows how to keep the growth engine running and proportional profitability high. That, combined with a modest valuation — the forward P/E is just 16.6 — makes me look very much like a buy.