Adobe $ADBE just reported a double beat and got destroyed for it. The reaction was nasty!
Shares slid 13.85% during Thursday's market session and closed near the low.
The company reported revenues of $5.71B versus the estimated $5.66B and reported earnings per share of $5.08 versus the estimated $4.97.
Their AI-related business contributed $125M in ARR, and they expect that number to double this year.
The growth is off the charts, but the market has already priced it into the stock.
The management team thinks the stock is cheap. They've repurchased $11.4B in stock over the last 12 months, equivalent to 7% of the market capitalization. They're authorized to repurchase an additional $14.4B.
ADBE is a share cannibal as it's aggressively eating its shares. This is a sweet tailwind for long-term investors.
Next week, the company is hosting the Adobe Summit 2025 in Las Vegas. It will be interesting to see if this successfully pumps the stock or worsens things.
Stay tuned...
Here are the latest earnings reactions from the S&P 500 👇
*click the image to enlarge it
As you can see, Dollar General $DG and Adobe reported double beats. However, the reactions were opposites of each other.
Here's why the market treated these earnings reports so differently 👇
DG is reclaiming the VWAP from its worst earnings reaction ever:
Dollar General reported a double beat, and the market loved it. The stock rallied 6.8% with a reaction score of 4.06.
The company surpassed $40B in sales last year for the first time, driven by 4.5% net sales growth in Q4.
They also decreased inventory per store by 6.9%, helping accelerate cash flow cycles.
The market loves what they're doing, but it hasn't for long.
Beginning in Q3 2022, the stock had 9 consecutive negative earnings reactions as the shares collapsed by 75%.
It was a historic disaster, but things have changed now. The stock has now been rewarded for its earnings reports in back-to-back quarters.
We're watching the VWAP anchored to the Q3 2024 earnings gap, the worst earnings reaction in the stock's history.
If DG is above 79.50, the path of least resistance is higher for the foreseeable future.
ADBE has been punished for 6 of its last 7 earnings reports:
Adobe reported a double beat and got blasted for it. The stock sank 13.9% with a reaction score of -5.20.
The stock decisively resolved a textbook distribution pattern, and it looks poised to continue falling.
If ADBE is below 435, the path of least resistance is lower for the foreseeable future.
