Adobe's shares are down nearly 32% year to date at $238.14, even though AI-first ending ARR tops $650 million and grows more than 150% a year, and the company posted its fifth straight EPS beat. The article argues the market is pricing in a generative AI threat to Creative Cloud that results have not yet shown, with a forward P/E of about 9. Bears point to net income rising only 3.1% against 12.89% revenue growth, a full-year ending ARR growth target of just 10.2%, and Barron's downgrade to Sell. CEO Shantanu Narayen is leaving after 18 years, with Anil Chakravarthy taking over, and the freemium strategy has yet to show it can convert users into paying customers at scale. Of 39 analysts, 23 rate the stock Hold, while shares fell 29.44% over the past year versus a 19.15% gain for the S&P 500.
Summary written by Upside AI from the original article. Read the source for full details.
Original headline: Adobe is Being Punished for a Creative Cannibalization Threat That Isn’t Real
Read the original on Yahoo Finance ↗
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