Adobe is worth $26 billion less as DocuSign fears causing a ‘knee kick’ for stocks

Some fear investors seem to turn to Adobe
ADBE,
-8.24%,
which also provides contract management software and enables electronic signature collection. Shares of Adobe fell 8.2% on Friday, its biggest one-day percentage drop since March 2020 and its worst day performance against the S&P 500 index.
SPX,
-0.84%

Share. The move took away $26.3 billion in market capitalization, bringing Adobe’s valuation to less than $300 billion.

The drop in Adobe stock has led Wedbush analyst Daniel Ives to label it a “DOCU-related sell-off,” he told MarketWatch.

“The DOCU print was a shock and this was a sensational reaction,” he said.

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Adobe will publish its own quarterly results on December 16. The company highlighted its digital signature technology in its earnings report earlier, as Chief Financial Officer John Murphy noted that “the Document Cloud’s growth drivers in the third quarter included the adoption of Sign in Acrobat due to the growing need to collaborate in a hybrid work environment. ”

While other domestic stocks were hit by the disappointing outlook earlier in the course of the pandemic, DocuSign proved more resilient at first. Its shares hit an all-time high in September and are up 165% since March 2020 through the end of Thursday. Now, the company will need to “show that it can generate, not just meet demand on a regular basis,” according to an Evercore analyst.

Adobe has a more diverse business than DocuSign. While the company sells software related to contract, it has many other services including subscriptions to creative programs like Photoshop. Adobe’s document cloud accounted for about 13% of the company’s total revenue in the last reported quarter.

Shares of Adobe are up 86% since March 2020 through the end of Thursday.