Adobe: Selloff After Non-Event Earnings Means One Thing

Summary

• Despite a beat-and-raise quarter, investors continue to sell off Adobe. Q2 report did not reveal anything concerning about the company's quality business model.
• Uninterruptedly strong fundamentals combined with a falling price only mean valuation contraction to an EV/FCF multiple of now 19 on a TTM basis.
• Adobe positions itself as a creative One-Stop-Shop, even integrating access to competing tools within its Firefly App.
• With a growing share of the Business Professionals target group, dependence from Creative & Marketing Professionals reduces gradually.
• AI disruption fears are real, but as of now, Adobe proven its position at the forefront of monetization.

JHVEPhoto

When a stock like Adobe (NASDAQ:ADBE) sells off after a beat-and-raise earnings report, it likely only means one thing: quality is becoming even cheaper. In Adobe’s valuation equation, only one parameter has changed after the report: the stock price. Fundamental financial quality is still untouched

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ADBE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.