Adobe Stock: Is it worth the price?
Adobe has changed its focus. Consider the growth-promoting cloud subscription services. Increasing at a rate of more than 30% yearly and accounting for more than 80% of the company’s overall revenue. Adobe has expanded by making acquisitions. A market cap of over $65 billion and a growth rate of more than 20% yearly.
For the second quarter, Adobe outperformed expectations on Wall Street. It provided guidance for the current term that exceeded analyst estimates. Earnings per share increased by 24% to $3.03 for the three months that ended on June 4 while sales increased by 23% to $3.84 billion. Analysts anticipated sales of $3.73 billion and EPS of $2.81 per share. Adobe anticipates earnings of $3 per adjusted share on sales of $3.88 billion for the current quarter. Analysts predict that EPS will increase by 15% in 2021 and by 18% for the full year. Three cloud computing companies are owned by Adobe.
Software for creative professionals like Photoshop and Illustrator is included in its flagship product, Creative Cloud. Their e-signature and Acrobat solutions are part of Document Cloud. Software and services for marketing are offered by Experience Cloud. Adobe seeks to accelerate its long-term growth through the expansion of its creative cloud strategy, data analytics, and customer experience businesses. By switching its creative and analytics software solutions to a subscription model in recent years, it has increased recurring revenue. ADBE is a stock that appeals to a wide range of investors due to its combination of growth, profitability, market leadership, and durable competitive advantage.
Adobe Stock falls 11% in response to the $20 billion Figma deal
After the creative software giant announced it will pay $20 billion to acquire Figma. A provider of a collaborative design platform. Its shares in pre-market trading fell by more than 11% on Thursday. The company also provided a mixed business update. The Figma deal will split 50/50 between cash and stock. While Figma CEO Dylan Field and staff members will additionally earn 6M extra Adobe restricted stock units that will vest over a four-year period after the deal’s closing.
When the deal went public, investors in Adobe started selling their stock early. This is because the firm expected Figma to increase profitability by the third year after the deal was completed. Implying that the agreement might have a negative impact on Adobe’s earnings for two years. Figma specializes in what it refers to as a “web-first collaborative design platform,” which enables staff members to work together on various projects kinds using digital tools.
Adobe also disclosed that it expects to announce fiscal fourth-quarter earnings, excluding one-time items, of $3.50 per share on revenues of $4.52 billion, vs analysts’ expectations of $3.47 per share on $4.6 billion in revenue. In addition, Adobe reported that for the third quarter of its fiscal year, it earned $3.40 per share, excluding one-time factors, on $$.43 billion in revenue, beating analysts’ estimates of $3.35 per share on $4.44 billion in sales. In advance of the company’s earnings report, a few Wall Street analysts this week downgraded Adobe’s shares.
