California-headquartered Adobe (NASDAQ:ADBE) has changed the creative digital economy as we know it with its suite of software products. Yet, ADBE stock has fallen sharply since November of 2021 — but that’s good news for contrarian tech-market investors. There is no disputing that Adobe is a leader in the document cloud market. It’s a lucrative segment that is expected to reach around $21 billion in 2023 and roughly $32 billion in 2024.
Moreover, Adobe is a robust revenue generator in the digital economy. The numbers prove this. In the three months ended Mar. 4, 2022, Adobe generated $4.262 million in total unaudited revenue. That’s a noticeable improvement over the $3.905 total revenue Adobe reported for the year-earlier quarter. The company is also highly profitable, having earned $1.266 million in net income during the three months ended Mar. 4, 2022. This is in line with the year-earlier quarter’s result, so Adobe appears to be on an even keel, financially speaking.
Nevertheless, investors have pummeled ADBE stock from roughly $700 in November of last year to around $410 recently. As a result, Adobe’s trailing 12-month price-to-earnings ratio has come down to 40.17, which isn’t unreasonably high.
Prospective investors shouldn’t be too concerned about the share-price dip. If anything, contrarians can view the negative investor sentiment surrounding Adobe as a buying opportunity. After all, Adobe’s status as a market leader and innovator is fully intact. The company reinforced this by announcing a number of product and service updates. Specifically, Frame.io’s video collaboration platform will be available to Adobe’s millions of Creative Cloud customers. In addition, Adobe introduced updates and upgrades to After Effects, including native M1 support, and Premiere Pro.
Steve Warner, vice president of Digital Video and Audio at Adobe, emphasized the benefits of these updates for video creators:
“The combination of Premiere Pro and Frame.io gives customers the world’s only end-to-end solution for video creation from ingest to editorial to output […] This is the first step toward building a powerful, cloud-based platform for the future of video creation.”
Clearly, ADBE stock in the $400s should be tempting for dip buyers. Furthermore, if the stock dives into the $300s and there is no negative company-specific news, this should be viewed as a terrific opportunity for tech-market investors.
— David Moadel
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Source: Investor Place