To The Moon

Adobe will report its earnings on December 15after the closing bell. Last quarter revenue of $4.43 billion missed analysts expectations by $6.34 million. Earnings per share was $3.40, beat by $0.06. However the stock plunged on news of Adobe's acquisition of Figma, a leading web-first collaborative design platform, for approximately $20 billion in cash and stock. The combination of Adobe and Figma will usher in a new era of collaborative creativity.

For the quarter ended November 2022, analysts expect earnings per share of $3.50, while revenue expected to come in at $4.53 billion.

Immersive Reality - A Future Concept

A recent article from BofA on “Immersive Reality” and its accompanying advertising opportunity for the next five years, augmented reality/virtual reality platforms are one of the key themes in which it would lead to benefits and costs for industry players as the environment shifts. Analysts Justin Posts mentions that social media was a major innovation for Gen X and Boomers, but Gen Z & Alpha (born between 1997 and 2022) are shifting media consumption patterns towards experiences that mix elements of social, immersive, and user-generated content. These consumers are more adverse to traditional advertising, and with attention fragmentation, they are harder for brands to reach. Content that are not very traditional advertising, such as brand driven experiences, visual search, augmented reality gamification, augmented reality lenses, non fungible tokens, and influencer/creator marketing. Those benefiting from such a shift are companies with exposure to immersive content creation, and/or with large creator content communities, such as Roblox, Unity Software, Snap, and Adobe, etc.

Adobe Price to Earnings (TTM) 5-years

Adobe EV/EBITDA (TTM) 5-years

Adobe currently trades at close to a 5-year low in terms of its price to earnings and enterprise value to EBITDA ratios. Any miss in earnings metrics or poor guidance for 2023 will leadthis stock down further as the sell off in technology and software stocks continues, and it will be a nice discount to pick up more shares ofAdobe. Why? Check out their income statement below. 

Adobe Gross Profit as % of Revenues 

$Adobe(ADBE)$ 

$Unity Software Inc.(U)$ 

$Roblox Corporation(RBLX)$ 

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