In March 2020, I begged Xerox ( XRX) to buy DocuSign ( DOCU) when the company was going after HPQ ( HPQ) at the time. Xerox was ready to pay up to $35 billion for HPQ. The market cap for DOCU at the time hovered around $15 billion. In fact, I thought either HPQ or XRX should find a way to buy DOCU.
Fast forward 18 months. HPQ's market cap sits at $32 billion. XRX hovers around $3.75 billion. And DocuSign?
$53.5 billion!
You screwed up, XRX and HPQ.
While DocuSign has struggled the past few weeks, it may be ready to turn here. The stock has been moving lower via a falling wedge pattern. Today's action may be the first sign of life bulls have seen for quite some time. The stock bounced off the support line of the wedge, creating the setup for a hammer pattern.
The Full Stochastics indicator may trigger a turn from bear to bull today, as well. Much of that will depend on exactly how shares close. I believe we'll have to wait another day for the MACD to flip bullish and possibly two or three days to get the flip in the Parabolic Stop-and-Reverse (PSAR). I'm least concerned about the PSAR. If DOCU can get above $272.50, then traders probably want to look at the long side.
I do realize hindsight is 20/20, but changing how legacy companies think may be the biggest challenge for that group. They can't get out of their own way or think forward. Sometimes simply trying to survive will do that to you. I give Salesforce ( CRM) credit for buying Slack. Heck, I'd even say IBM ( IBM) is starting to come around. The new legacy names like Alphabet ( GOOGL) , Facebook ( FB) , and Amazon ( AMZN) don't seem to be repeating this problem in the same manner, although Amazon does appear to be picking up some old school legacy businesses like media print and grocery stores, so they may be falling into the same trap. I think we can all look forward to the day they spinoff Amazon Web Services.
Keep an eye on DOCU. Even if XRX and HPQ missed it to buy, you don't have to.
(CRM, GOOGL, FB and AMZN are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
