Although the tech stocks led the markets higher last week, inflation could end tech stocks’ rally next year. The tech-heavy Nasdaq composite dipped after a three-day winning streak and ended the regular trading session lower yesterday. Even mega-cap tech shares caused U.S. stocks to tumble last week due to investor concerns over the COVID-19 omicron variant.
Furthermore, the Fed is expected to consider speeding up the pace of its tapering to $30 billion per month at its December meeting. This might give the Fed the flexibility to raise interest rates soon, which in turn could increase the interest expense borne by tech companies, reducing their future earnings.
Given this backdrop, we think investors should take care regarding betting on popular tech stocks DocuSign, Inc. (DOCU) and Asana, Inc. (ASAN), which have plunged more than 45% in price over the past month.
DocuSign, Inc. (DOCU)
San Francisco-based DOCU provides cloud-based software in the United States that delivers an e-signature solution to enable businesses to prepare, sign and manage agreements digitally. The company’s products include DocuSign eSignature, DocuSign CLM, DocuSign Insight, and other products that include DocuSign Payments and DocuSign Analyzer.
This month, The Schall Law Firm, a shareholder rights litigation firm, started investigating allegations on behalf of investors of DOCU that the company violated securities laws. The investigation is based on whether DOCU issued false and misleading statements and failed to disclose information pertinent to investors after DOCU announced disappointing year-end financial projections on December 2, 2021. This news may negatively impact DOCU’s price performance in the near term.
DOCU’s total operating expenses for its fiscal third quarter, ended October 31, 2021, increased 29.8% year-over-year to $432.85 million. The company’s loss from operations came in at $3.36 million, and its net loss amounted to $5.68 million during the period.
DOCU’s shares have declined 45.7% in price over the past month and 46.9% over the past three months.
Asana, Inc. (ASAN)
ASAN, in San Francisco, is a work management platform that enables individuals, team leads, and executives to organize work—from daily tasks to cross-functional strategic initiatives. The company enables its users to communicate, monitor status, and oversee work across projects to gain real-time insights. ASAN provides various features in its platform, including timeline, app integration, automation, and other features.
During its fiscal third quarter, ended October 31, 2021, ASAN’s total operating expenses grew 39.9% from their year-ago value to $158.84 million. Its loss from operations rose 9.9% from the prior-year quarter to $68.09 million. And the company’s net loss came in at $69.28 million. Also, its loss per share amounted to $0.37 during the period.
ASAN’s EPS is expected to decline 22.7% in the current quarter and 28.6% next quarter. The stock has fallen 48.3% in price over the past month.
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DOCU shares were trading at $144.22 per share on Friday morning, down $5.15 (-3.45%). Year-to-date, DOCU has declined -35.12%, versus a 26.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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