Adobe feels like a business going through a legitimate transition rather than collapse. cash flows are ok, the moat is real, and the valuation has dropped massively..
Is Adobe at PE ratio 15 a buy or do you think they are really helpless and people gonna use other tools?
What's going on with Adobe? The creative industry that adobe is definitely going through transition but to what extent can they replace adobe?
I want to enter adobe at this price but don't wanna end up a bag holdr.
Why Adobe is not a great buy deal now?
byu/karlelzz011 instocks
Posted by karlelzz011
9 Comments
It is a great buy now. If it drops, you buy more. You hold the bag until it goes up 2-3x, or more.
AI coming for their lunch.
How can you simultaneously not be able to come up with even a story (let alone a valuation) and think it’s a “great buy”?
I bought a couple of days ago. I’ve been working as a 3d generalist / technical artist last 4 years and just realized that it is very difficult to get out of the adobe eco system and the valuation is low-ish.
Not trying to be mean or rude, it was trading below $230 just two weeks ago, any reason why you did not like it back then? What has changed in these 2 weeks that it looks like a better deal now after it gained more then 10%?
As a disclaimer – I did buy it after their drop post last earnings at the similar price. I could not add more as it dipped further. Now it is trading at my cost level.
Adobe products are tools. AI doesn’t need any of those tools and AI is making a massive dent, an almost hole in the industry that buys Adobe products. AI has a high potential to kill dead the industry that buys Adobe products.
I would stay a long mile away from Adobe.
There’s definitely uncertainty how much AI is going to disrupt them, which means it is higher risk when forecasting fundamentals. Investors are demanding a lower valuation or a higher rate of return for the risk.
I don’t think it’s binary, it’s not like AI will replace everything Adobe currently sells. However, it is very likely that they will need to reconsider their existing business model against new industry entrants.
The valuation premium Adobe used to have is not likely to return in my opinion, it’s a big call to make. You have to argue that there are not many better alternative services today, similar to the pre-AI period.
You can’t dismiss risk of disruption. Their ability to raise prices and retain existing customers is weaker (moat). However there will be good value in this business at some point, I just don’t think 15 P/E is particularly compelling or exciting.
It’s hard, there’s no right answer, that’s why everyone argues about it on reddit.
it is
The problem is AI and when you think about it, sure there could be a legitimate risk. Too many unknowns right now.
But there are more AI-proof businesses I would say. Example Workday and CRM.
AI can make a workday with better UI -> people could do this for years, yet it remains. CRM is trash, anyone can Claude Code a better thing -> companies could also hire 5-10 people to make their own Salesforce alternative in the last 10 years, but they didn’t. These businesses are bad, can be run by anybody, and are really sticky.
Adobe, imo is also more AI-proof than people think, but ofcourse there is a lot of room for being wrong