DocuSign Inc DOCU shares are diving Friday morning after the company reported fiscal third-quarter 2022 earnings and issued weak guidance.
Despite being about 50% off of its 52-week highs, the valuation is still stretched, according to Hightower Advisors' Stephanie Link.
"This one's a hard one to own here at 124 times earnings and even 23 times price-to-sales," Link said Friday on CNBC's "Squawk Box."
The stock moves based on billings numbers, Link noted. Billings came in $565.2 million, representing an increase of 28% year-over-year, but the growth was down from previous quarters.
"After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth," said Dan Springer, CEO of DocuSign.
Billings expectations were for $595 million, Link said, adding that DocuSign also guided lower for fourth-quarter billings, expecting growth of 21% to 23%.
"This is a company that was seeing 40%, 50%, 60% growth in billings," she said.
Link told CNBC that beyond tough comparisons and slowing growth, DocuSign also said it had execution problems during the quarter.
"I think it takes a while to fix execution," she said. "I like to look at things that fall pretty substantially, but I just can't get my arms around valuation."
DOCU Price Action: DocuSign has traded as high as $314.76 and as low as $179.49 over a 52-week period.
The stock was down 32.90% at $156.97 Friday morning.
Photo: courtesy of DocuSign.
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