top of page
Search

Hype Asset of the Day | June 23, 2022



Adobe Inc (NASDAQ: ADBE)


Adobe Inc. is an American multinational computer software company headquartered in San Jose, California. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. Its flagship product is Creative Cloud, a subscription service that allows members to access its creative products such as Photoshop. With the world now expanding its digital presence, Adobe has seen a 50% hike in mentions promoting investors to look into the company and find out what makes it gain such hype.

It’s currently trading at $365.33 per share.


Positive Hype

Adobe is one of the most common software products used, so there’s no doubt about why it's mentioned so often. Here are some of the reasons it’s generated so much positive hype over the last few days.


  • Adobe has done incredibly well in terms of revenue over the last few years. From 2019 to 2021, revenue rose 41.3% from $11.2 billion. For 2022's second quarter, revenue hit a record high of $4.4 billion, up 14% year over year, with subscription revenue making up close to 93% of total revenue.


  • Other attributes such as consistent free-cash-flow generation also justify why the company makes for a safe investment during volatile times.


  • Adobe beat analysts’ consensus estimates for both earnings and revenue and set new records for sales (which rose by 17% in the first quarter) and cash flow (operating cash reaching $1.8 billion, or 42% of sales)


  • The company reported non-GAAP (adjusted) earnings of $3.35 in the quarter, up from $3.03 in the year-ago quarter which was also above Wall Street’s consensus estimate of $3.31.


  • To solidify the claim of solid financials, lastly, Its adjusted net income grew 9% to $1.59 billion, or $3.35 per share, which cleared analysts' estimates by four cents.


  • Adobe has a dominant market share position in several categories that are likely to grow significantly over the next decade as well.


  • Since having released its guidance for the third quarter, share prices have fallen by about 5% making it a good time to enter now.


Negative Hype

No business is perfect and Adobe Inc. is no different. Here are a couple of reasons why Adobe Inc might not be as great as it first seems, at least for now.

  • Despite the fall in prices, Adobe stock isn't a screaming bargain at 27 times this year's adjusted EPS.

  • There are also a fair number of measures where Adobe hasn’t met analyst expectations for the future. One of them is non-GAAP earnings said to be at $3.33 in the third quarter, below Wall Street's average estimate of $3.40 per share.

  • Additionally, the company expects revenue to be about $4.43 billion, which is less than the $4.51 billion consensus estimate from analysts.


Conclusion

Adobe’s poor outlook is based on "summer seasonality" in the third quarter, higher tax rates, a foreign exchange impact of $175 million throughout the second half of the year, and the suspension of its new sales in Russia and Belarus in response to the war in Ukraine. However, these are all short-term problems and with the kind of solid financials and industry leadership that Adobe has, the company looks like it’ll bounce back as soon as macroeconomic conditions become more favourable.




HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.









5 views0 comments
bottom of page