As an investor, I have been keeping a close eye on $Adobe(ADBE)$ Adobe (ADB) ahead of its earnings release after the market close today. I have been thinking about the company's prospects, and the various factors that might affect its stock price in the short-term. In this article, I will share my inner thoughts on how I am going to trade Adobe before it releases its earnings.
Slowing Demand for Adobe Software Based on Economic Uncertainty
One factor that concerns me is the slowing demand for Adobe software due to economic uncertainty. Adobe's annual sales forecast has also fell short due to the currency impact. This suggests that the company is facing headwinds in some of its key markets. However, I also know that Adobe is a leader in the creative software space, and it has a loyal customer base. So, I think the long-term fundamentals of the company are strong.
Adobe and Its AI Potential
Another factor that I am considering is Adobe's potential in the AI space. Adobe has been investing heavily in machine learning and artificial intelligence, which could give it an edge in the future. Adobe's research arm has been exploring new AI applications, such as content creation and analytics. I believe that this could be a significant growth driver for the company in the coming years.
Acquisition of Figma
Adobe Tumbles in September 2022 After Announcing Deal to Buy Figma for About $20 Billion. I am also mindful of Adobe's recent acquisition of Figma, a leading design and prototyping tool. The deal is reportedly worth about $20 billion, but it is currently in jeopardy after the EU blocked the acquisition on competition grounds. The outcome of this deal could have a significant positive impact on Adobe's stock price, especially if it falls through.
Mixed Economic Data and Troubles in the Financial Sector
On the economic data side, there is some good news in the form of today's PPI figures, which dropped lower than expected. However, the stock market sank following news that the Saudi National Bank has refused to offer further financial support to troubled Swiss lender Credit Suisse Group. This news injected more jitters into the market, and Credit Suisse's stock fell more than 20%. This could affect investor sentiment towards Adobe and other stocks, including the broader market.
Short Term Support Level
Based on technical analysis on Tiger App, the short-term support level for Adobe is 324.50 (see screenshot below). The relative strength is also quite low at around 40, and the stock is down around 1% year to date compared to Nasdaq composite which is up 9% based on yesterday. While Adobe has consistently beaten consensus EPS for the last four quarters, there is still a chance that traders will react negatively to its earnings results especially if guidance is worse than expected.
Good Chance to Purchase Call Options at a Lower Price
Given these factors, I think that there is a good chance that Adobe's stock price will decline after the earnings release. However, I also believe that Adobe's fundamentals are still strong, and the company has a track record of beating earnings estimates. Therefore, I plan to take advantage of this potential dip in the stock price by purchasing some call options at a lower price near the support level. My plan is to buy some call options at the strike price of 325 $ADBE%2020230324%20325.0%20CALL$ $ADBE 20230324 325.0 CALL$ or 322.5 $ADBE%2020230324%20322.5%20CALL$ $ADBE 20230324 322.5 CALL$ expiring next week, depending on how much Adobe moves lower tonight.
Conclusion
In conclusion, I am cautiously optimistic about Adobe's prospects. While there are some short-term headwinds, I believe that the long-term fundamentals of the company are strong. I am looking forward to the earnings release later today and plan to take advantage of any potential opportunities that arise.
@TigerStars @Daily_Discussion @MillionaireTiger @Daily_Discussion Thank you for reading
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