Why Docebo Fell 13% on Wednesday

Docebo (TSX:DCBO)(NASDAQ:DCBO) saw shares plummet even further after announcing a major shareholder would drop US$200 million in shares.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published January 6, 2022 8:20 am EST

Docebo (TSX:DCBO)(NASDAQ:DCBO) saw shares fall 13% on January 5, as of writing this article. This came after an announcement the learning management software company allowed major a shareholder to sell its shares.

What happened?

Docebo stated it would allow Intercap Equity to sell up to US$200 million of its existing shares to the public. Docebo will not have anything further to do with the at-the-market program and won’t receive any sales from it either. Sales aren’t expected until March 2022 under the company’s insider trading policy.

Intercap Equity invests in companies, stating on the company website the goal of helping entrepreneurs build “successful and enduring companies.” Intercap helps companies like Docebo with going public, mergers and acquisitions, private debt and more.

So what?

The question that Motley Fool investors have now is, why would Intercap choose now to divest itself of Docebo shares? This is certainly a red flag, after months of seeing the share price of Docebo drop further and further. As of writing, Docebo is down 40% from 52-week highs.

The thing is, according to analysts, Docebo stock looks incredibly undervalued. The consensus target price remains at about $120. That would give the stock a potential upside of 69% as of writing.

What investors should then be wondering is, what does Intercap know that we don’t?

Now what?

This news also came out as the next earnings report comes closer, expected Mar. 10, 2022. Wall Street analysts peg the company with reporting US$29.85 million for this next quarter. This would be an improvement of 59% year over year. Docebo managed to beat estimates during the last quarter as well. It reported $0.02 earnings per share, up $0.07 from the expected loss of $0.05.

But even with analyst recommendations and buys across the board, you can’t help the move of the market. The tech industry as a whole has seen a drop in share price, as investors get out of riskier areas in favour of sure things. But this latest news is definitely something future investors should consider before seeing today’s share price as a deal or a dud.