Doximity Plummets 6.4%: What's Fueling the Selloff?

Summary
• DOCS plunges 6.4% to $62.31, erasing $4.27 from its value in under 4 hours
• Intraday range of $66.26 to $62.11 signals sharp volatility
• Analysts split on guidance, insiders offload shares amid cybersecurity risks

DOCS' dramatic intraday selloff has ignited market speculation, with the stock trading at its lowest level since April. The move follows mixed earnings results, insider sales, and sector-wide cybersecurity concerns. Traders are now dissecting technical indicators and options activity to gauge whether this is a short-term correction or a deeper bearish shift.

Earnings Beat and Guidance Cut Spark Investor Anxiety
Doximity's 6.4% decline stems from a combination of factors: while Q2 earnings exceeded estimates ($0.36 vs. $0.31), the company cut FY 2026 guidance and reported a 15.2% revenue increase that fell short of Wall Street's expectations. Compounding this, insider sales of 15,000 shares by directors and a string of data breaches at healthcare providers (including 32 Pearls and West Texas Oral Facial Surgery) have amplified sector-wide cybersecurity jitters. The stock's 52-week low of $34.34 now looms as a critical psychological threshold.

Health Information Services Sector Suffers as Veeva Systems Drags
The Health Information Services sector is under pressure, with Veeva Systems (VEEV) down 1.2% on the day. DOCS' 6.4% drop outpaces the sector's average decline, suggesting specific company concerns outweigh broader industry headwinds. The sector's beta of 1.36 indicates heightened sensitivity to market swings, with DOCS' 7.11% intraday loss reflecting both company-specific and macroeconomic anxieties.

Options Playbook: Capitalizing on Volatility and Key Levels
• 200-day MA: $57.31 (below current price) • RSI: 68.78 (overbought) • MACD: 0.29 (bullish) • Bollinger Bands: 64.44 (upper), 60.25 (middle), 56.05 (lower)

DOCS is trading near its 200-day moving average with overbought RSI, suggesting potential for a pullback. The options chain reveals two high-conviction plays:

• DOCS20250919C60 (Call, $60 strike, 9/19 expiry):
- IV: 33.43% (moderate)
- Leverage: 15.17% (high)
- Delta: 0.66 (moderate sensitivity)
- Theta: -0.071 (significant time decay)
- Gamma: 0.053 (responsive to price swings)
- Turnover: 73,240 (liquid)
- Payoff at 5% downside ($59.19): $0.19/share
- This contract offers aggressive leverage for a potential rebound above $60, with high gamma amplifying gains if the stock breaks out.

• DOCS20250919C65 (Call, $65 strike, 9/19 expiry):
- IV: 33.04% (moderate)
- Leverage: 36.80% (very high)
- Delta: 0.38 (moderate sensitivity)
- Theta: -0.056 (moderate time decay)
- Gamma: 0.056 (responsive to price swings)
- Turnover: 45,074 (liquid)
- Payoff at 5% downside ($59.19): $0.00 (out-of-the-money)
- Ideal for directional bets on a sustained rebound, with high leverage amplifying returns if the stock closes above $65 by expiry.

Conservative traders might consider a short-term straddle around $62.31, while aggressive bulls should focus on the $60 call. Watch for a breakdown below $58.00 (200D support) to trigger deeper selling.

Backtest Doximity Stock Performance
Doximity, Inc. (DOCS) experienced a notable intraday plunge of -6%, but the stock has since rebounded. Let's analyze the performance after the decline:1. Post-Plunge Rebound: DOCS has seen a significant recovery, with an increase of 14.2% or 16.1% following the -6% drop. This rebound suggests a strong buying pressure that could be indicative of investor confidence in the company's fundamentals and future prospects.2. Market Reaction to Earnings and Acquisition: The positive performance can be attributed to several factors, including the company's strong Q1 fiscal 2026 results and the acquisition of AI startup Pathway Medical. These developments have reinforced the growth narrative of the company and its focus on expanding its technology suite to deepen client engagement and capture additional pharma market share.3. Investor Sentiment and Fair Value Estimates: The Simply Wall St Community has provided fair value estimates for DOCS, ranging from $41.46 to $67.33. The current price is within this range, indicating that investors may perceive the recent volatility as an opportunity rather than a risk.4. Long-Term Outlook: Despite the expected slowing of future earnings growth, the company's strong business fundamentals, including a return on equity far above the industry average and substantial five-year net income growth, suggest a solid long-term investment case. The market seems to be focusing on the company's ability to reinvest profits back into the business and its potential for steady growth driven by new product launches and industry tailwinds.In conclusion, while DOCS experienced a significant intraday plunge, the stock has shown a strong recovery, driven by positive earnings results, strategic acquisitions, and investor confidence in the company's growth prospects. The current price is within the range of fair value estimates, indicating a favorable risk-reward scenario for investors.

Act Now: DOCS at Pivotal Crossroads
Doximity's 6.4% selloff reflects a perfect storm of earnings caution, insider skepticism, and sector-wide cybersecurity fears. While technicals suggest a potential rebound near $60, the 52-week low of $34.34 remains a critical floor. Sector leader Veeva Systems (VEEV) down 1.2% underscores broader industry fragility. Traders should prioritize the DOCS20250919C60 call for a potential bounce above $60 or the $65 call for a sustained recovery. Immediate action is warranted as the stock approaches key support levels.