Share Prices of Adobe Experience a Downtrend and Reason is Low Outlook
An alarming update for Adobe investors as it has suffered a loss in the share prices. The Thursday trading for Adobe saw a 5% dip just when the maker of the design software shared its outlook with the investment community.
It was a shock for the shareholders when Adobe shared the outlook because it was much lower than the expectations of the analysts. The full-year guidance is now a huge dilemma for the entire investment community.
The reason behind the disappointment among the investors is that Adobe had performed well in the recent quarters. Even the last completed quarter’s earnings were above the expectations of the analysts and investors.
Earnings for the Recent Quarter
For the recent quarter, Adobe had ended up generating earnings worth $3.35 per share. The Refinitiv analysts had expected that the company will only be able to generate earnings that would be worth $3.31 per share.
The same goes for the revenue generation versus the estimations. The executives reported they were able to generate revenue worth $4.39 billion. The actual generation of the revenue was versus the $4.34 billion revenue expectation that the Refinitiv analysts had set.
Full Fiscal Year Guidance was a Disappointment
While the recent quarter performance was reportedly phenomenal, Adobe managed to shock the investors with the full fiscal year guidance. Adobe’s analysts announced that they expected to accumulate a revenue of $17.65 billion for the entire fiscal year. As of the adjusted earnings, their target is $13.50 per share.
Whereas, the Refinitive analysts had higher expectations. They had expected Adobe to hit a revenue threshold of $17.85 billion where the adjusted earnings would be $13.66 per share.
The factor that has become a huge pain point for the investors is the guidance Adobe had shared in December 2021 for the same fiscal quarter. Back in December, Adobe shared its revenue expectations to be $17.90 billion. Whereas, their adjusted earnings guidance expectations were $13.70.
Given the expectations set by Adobe in 2021 for the 2022 fiscal year, this is a significant downgrade. Therefore, the investors are not taking the changes lightly and have shown then discomfort by pulling out of their investments.
Adobe Blames Russian War and Summer Season
The Adobe executives are citing the Russia-Ukraine war and the summer season as adding negative impact to the company’s full fiscal year guidance.
The executives referenced Salesforce and Microsoft, reminding the investors how both tech giants have failed to hit their earnings targets for the recent quarters.
They have also taken into consideration the skyrocketing inflation rates as well the interest rates as why they have lowered the guidance. Looking at the past performance of Adobe, it can be expected that the company may again prove the majority of the investors wrong. It may again manage to exceed the expectations.