Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
Adobe is best avoided because a very low valuation comes with a highly uncertain future, making the situation amazingly complex. x.comÂ
Adobe is shaping up as PayPal 2.0, a stock influencers will pump while no one makes money. Its conference call was a complete dumpster fire, with the CEO and CFO looking checked out. The mention of SEMrush and the talk of a freemium model drew only ridicule. x.comÂ
Adobe is a strong company hit harder than it should be, as the market treats a temporary slowdown as permanent decline. It fits the undervalued setup of a real moat, temporary rather than structural problems and extremely negative sentiment, where the price has fallen more than the fundamentals, lowering risk and raising upside. Great companies adapt and recover. x.comÂ
Adobe remains the best example of what not to buy because AI has had minimal impact and its backlog is slowing rapidly. Management chose user acquisition over monetization, as Duolingo did, leaving open whether users stay when prices rise; for now, waiting to monetize looks the same as being unable to. Free or cheaper tools that match its specialist subscriptions could cut usage, RPO and cash generation. When acceleration and margin expansion are everywhere, owning neither makes little sense. … Show more
Adobe's consistently decelerating ARR growth is a bad sign that many bulls overlook, though it doesn't mean the company is going to zero. x.comÂ
Adobe trades at 2018 price levels even though revenue has grown nearly 200% since then, from $2.2B to $6.4B, and its $25B buyback on a $100B market cap amounts to a quarter of the company. The bottom may not be in yet, but the market won't ignore it forever. x.comÂ
There is zero reason to buy Adobe, because any argument that it is undervalued points instead to a more durable business that has been similarly punished, such as Salesforce or Workday. Marketing is fake, dumb and a commodity, while Salesforce's customer record is durable and the source of truth. x.com x.comÂ
Adobe is hard to want to own after an open-source project reimplemented its full software suite, as @math_fournity reports. x.comÂ
Adobe is a bit undervalued, though not significantly, at 13x earnings with 13% revenue growth. Its falling profit margin is concerning, and AI threats are growing as image generation improves. x.comÂ
Adobe is not re-accelerating: management guides growth down to 9-10% with operating margins falling, and more pressure lies ahead. That makes buying every dip at about 16x earnings a mistake, even as @qualtrim points to 12% revenue growth and a 47.4% operating margin. x.com x.comÂ