Wednesday's Headlines: DocuSign Ousts CEO Dan Springer

Wednesday's Headlines: DocuSign Ousts CEO Dan Springer

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Tesla Motors (TSLA) +9.4%

Upstart Holdings (UPST) +8.8%

Evolent Health (EVH) +8.4%

Roku Inc. (ROKU) +8.1% Group (TCOM) +8.1%

Moving Down ⬇️

Chuy's (CHUY) -6.0%

iRobot (IRBT) -4.9%

Lovesac (LOVE) -4.2%

Facebook (FB) -4.1%

Chegg (CHGG) -3.7%


Here are the stories that you need to know ahead of market-open today, Wednesday, the 22nd of June.


DocuSign Ousts CEO Dan Springer 👨‍💻

Dan Springer has been sent packing from his role as CEO of DocuSign (DOCU)

The decision to oust Springer comes as the post-pandemic hangover has led to the stock losing roughly 80% of its value in the past year. Chairman of the Board Maggie Wilderotter will act as interim CEO as the company searches for a replacement.

Springer was a popular CEO, with a 93% approval rating on Glassdoor. His 5-year tenure saw him take the company public in 2018 and deliver outsized returns for a number of years. He guided the company through an opportunistic growth period as the pandemic paved the way for perfect conditions for DocuSign to thrive.

However, that growth has since dissipated as the company faces the realities of the pandemic pull-forward, tough comparables, and an altogether different macroeconomic picture to the one which saw it flourish. The outlook for the business has become bleak, with growth projections in the single-digits falling well below both analyst and DocuSign’s estimates. This eventually made Springer’s position as a non-founding CEO untenable.

With the stock now down more than 30% from its pre-pandemic highs, the board decided to look elsewhere for someone to shore up the company’s balance sheet, restructure its salesforce, and reinvigorate growth.

While the news initially boosted the stock, it ultimately fell almost 2% yesterday and is down a further 3% in pre-market trading as a cloud of uncertainty lingers above what was once a darling of Wall Street.


Elon Musk Confirms Tesla Job Cuts ✂️

Tesla (TSLA) CEO Elon Musk has confirmed that he plans to cut 10% of the company’s salaried workforce over the next three months.

Speaking at Bloomberg’s Qatar Economic Forum yesterday, Musk corroborated rumors of lay-offs at the company that had been swirling around since last week. Explaining the decision, Musk said that Tesla “grew very fast on the salaried side and we grew a little too fast in some areas”.

However, he said that these cuts would actually only represent a 3% to 3.5% reduction in the company’s total headcount, and that he even expects to grow the overall workforce over the next twelve months with the addition of more hourly workers.

These job cuts from Tesla come amidst wider lay-offs in the broader tech industry, with companies like Coinbase, Stitch Fix, and Redfin all cutting their workforces recently too as the market continues to slide. Tesla’s decision to pull back on salaried workers might not come as a surprise to many, with Musk being well publicized over his “super bad feeling” about the economy early in the month.

Indeed, he was quizzed again at the same forum yesterday to see whether he thought a recession was likely or not, but remained classically cryptic: "I think a recession is inevitable at some point. As to whether there is a recession in the near term, I think that is more likely than not."

Despite this, Tesla stock was up close to 10% yesterday, buoyed by wider growth in the EV industry.


Kellogg’s Set To Split In Three 🥣

Kellogg’s, the iconic food manufacturer, has made the decision to separate into three independent publicly-traded companies. The companies will each focus on a respective segment of Kellogg’s current offerings: namely snacking, cereal, and plant-based foods. The announcement initially saw the company’s stock spike by over 8% yesterday, but it ended up closing up just under 2% after the initial flurry had died down and is flat before market-open this morning.

Spinning these segments off into individual brands might seem unusual, but it's a common ploy used by companies who have spread themselves a little too thin. These splits allow companies to simplify and refocus around a singular market with a much more focused strategy. Investors will probably be wondering what will happen to their existing shares, and Kellogg’s has announced that they will receive shares in each spinoff relative to their current holdings.

Kellogg’s was initially founded in 1906 following the invention of its world-famous Corn Flakes. Since then, the company has grown into a titan of the food industry. It has acquired numerous companies over the years in an attempt to diversify its offerings across the industry, the most notable of which is the purchase of Pringles from Procter & Gamble in 2012.

The company has bucked the general trend for the market by being up over 6% year-to-date and typically enjoys relative stability due to its products being deemed necessities even during times of economic decline. That being said, its cereal and plant-based divisions have been underperforming, so these spin-offs will be attempting to regain lost market share in two highly competitive industries.

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