Zoom Video Communications Inc (NASDAQ: ZM) and DocuSign Inc (NASDAQ: DOCU) have tanked roughly 65% since early September 2021, which makes both an attractive acquisition, as per RBC Capital’s Rishi Jaluria.
Why are the two still valuable?
Despite a brutal hit to the stock price, Jaluria added, both ZM and DOCU are technologically sound, and, therefore, valuable for the big shot software companies. On CNBC’s “Power Lunch”, he said:
If I’m a large strategic software company, I’m taking a very close look at both of these assets and saying, man, if I can integrate Zoom or DocuSign into my platform, it becomes so much more valuable. And I can take advantage of this dislocation.
Interestingly, Zoom and DocuSign were two of the most prominent beneficiaries of the COVID pandemic that fuelled a several fold increase in their respective valuations. Unfortunately, though, both stocks have now pared their entire pandemic gains.
Who could be the buyer?
Jaluria sees giants like Salesforce, Microsoft, Oracle, and SAP as potential buyers that could benefit from acquiring Zoom Video Communications or DocuSign Inc. He added:
I think these are the big ones that could be interested in either, and none of them would face any of the anti-trust scrutiny that the likes of Amazon or Google getting involved with. This environment in software reminds me a lot about 2016.
Also on Monday, SailPoint Technologies jumped 30% after Thoma Bravo (private equity company) said it will buy the identity management company for $6.90 billion.
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