Daily Journal's KDJ Death Cross signals a potential bearish trend, Marubozu confirmed.

On September 29th at 13:00, the 15-minute chart of Daily Journal's stock triggered a KDJ Death Cross and a Bearish Marubozu formation. This indicates a shift in the momentum of the stock price towards a downward trajectory, with potential for further decline. Sellers currently dominate the market, and it is likely that this bearish momentum will continue.

On September 29th at 13:00, the 15-minute chart of Daily Journal Corp's (DJCO) stock triggered a KDJ Death Cross and a Bearish Marubozu formation. This technical analysis indicates a shift in the stock price towards a downward trajectory, with potential for further decline. Sellers currently dominate the market, suggesting that this bearish momentum may continue.

DJCO, a California-based legal publisher, has seen a significant shift in its revenue streams. As of the nine months ended in fiscal 2025, nearly 77% of its revenues come from the judicial software vertical Daily Journal: From Editorial Legacy To Valuation Challenges On The Market^[1]. This pivot into GovTech, which includes selling judicial software used by courts to digitize case records and process online payments, has been the company's primary growth engine since 2014.

Despite the promising growth prospects in the GovTech industry, DJCO's stock has underperformed compared to broader market indices. While the S&P 500 is up 13% YTD and the Dow Jones Media Index is down only –2%, DJCO has lost –21% so far this year. This discrepancy may be due to the difficulty in valuing a GovTech business where more than 80% of total assets sit in a securities portfolio.

Investors are struggling to accurately value DJCO due to the significant weight of its securities portfolio. The company holds a portfolio worth $443M, which cannot be treated as available cash due to market volatility and collateral pledges. This portfolio dominates the balance sheet and distorts accounting under different market conditions.

The challenge for DJCO is to maintain and expand its dependency within courts, as migrating millions of records or risking disruptions to e-filing processes is neither easy nor desirable. The company's strategy appears defensive, focused on retaining existing clients and expanding contracts incrementally through additional modules.

Looking at the valuation, DJCO's enterprise value stands at about $625M, but this number does not fully capture the company's true value due to the securities portfolio. If we annualize operating EBITDA and exclude portfolio gains and losses, the figure comes to around $10M to $11M. Using an SOTP (Sum-of-the-Parts) approach, which separates the operating business from the securities portfolio, we get a more reasonable EV/EBITDA multiple of 18.2x.

Compared to the sector, Tyler Technologies (TYL), a benchmark in GovTech, trades around 34x forward EV/EBITDA. This suggests that the market is not punishing DJCO's operating model but rather the difficulty of valuing the combination of its business and its portfolio.

The main risk for DJCO is the securities portfolio. A 15% drop would mean a loss of about $65M, or roughly $47 per share. Additionally, a macro environment of prolonged high interest rates and possible budget cuts in several U.S. states could slow down the adoption of new contracts or the expansion of Journal Technologies' services.

Given these factors, the current Hold rating for DJCO appears justified. The 12-month price target, based on today’s levels and the portfolio value from the latest quarter, should remain in the range of $440 to $450 per share. However, this figure must be read with perspective, as significant changes in the securities portfolio could invalidate this target.