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DocuSign, Inc. (DOCU) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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DocuSign, Inc. (DOCU)

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Intrinsic Value (DCF)

Current$59.69
→
Intrinsic$157.11
+163%
$107.76$157.11$250.74
Market implies 1% growth for 5 years
DCF analysis suggests DOCU could have 163% upside at 25% growth — verify assumptions match your view.
At $60, the market prices in only 1% growth — below historical 25%, suggesting low expectations.
Range: Bear $108 → Bull $251. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$193$208$224$242
10%$136$146$157$169
12%$104$112$120$129
14%$84$90$97$103

Bull Case

  • Bull case ($251) offers 320% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($108) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.15B
Year 2$1.44B
Year 3$1.80B
Year 4$2.25B
Year 5$2.81B
Terminal$41.32B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$920.28MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DOCU stock undervalued or overvalued?
🟢 UNDERVALUED

DOCU trades at $59.69 vs. our DCF-derived intrinsic value of $130.58, implying +100% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of DOCU's future cash flows. The bear case ($86.50) still suggests upside, providing margin of safety.

What is DOCU's intrinsic value?

Using a 5-year DCF model: Base FCF of $920M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-524M net debt and dividing by 0.21B shares: Bear $86.50 | Base $130.58 | Bull $195.48. Current price $59.69 implies +100% to base case.

How is DOCU's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($26.94B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.