Adobe predicted a slowdown in its growth. Shares fell by 10%

Adobe спрогнозировала замедление своего роста. Акции упали на 10%

16 December Adobe reported for the fourth quarter of 2021. The results were slightly better than expected., but the company gave a weak forecast for the next quarter. During the day, ADBE shares fell by 10%, to 566 $.

Revenue will grow by only 8%

Here are the financial results compared to the same quarter last year:

  • revenue — $4.1 billion (+20%);
  • operating profit — 1.5 bln (+24%);
  • net profit — 1.2 bln (−45%).

And this is revenue in the main operating segments:

  • Digital Media – content creation apps like Photoshop and document apps like Acrobat Reader – $3 billion (+21%);
  • Digital Experience — analytical services, that help other companies increase sales, - Billion dollars (+23%).

Net profit fell by almost half, since Adobe a year ago received tax deduction for a billion dollars. And here's adjusted earnings., which does not take into account such articles, grew by 13%, up to $1.5 billion.

The company also gave a revenue forecast for the next quarter and 2022 fiscal year.. It turned out to be worse than analysts' expectations.:

  • first quarter of 2022 — 4,23 vs$4.34 billion;
  • 2022 year — 17.9 against 18.16 billion dollars.

Adobe explained this forecast by, that the first quarter of fiscal year 2022 will be a week shorter, than in 2021. As a result, revenue in the Digital Media and Digital Experience segments will not increase by 17 and 18%, as was expected, and only on 8 and 11% compared to the first quarter of 2021.

Revenue and forecast for the next quarter, million dollars

1к2021 3905 (+26%)
2к2021 3835 (+23%)
3к2021 3935 (+22%)
4к2021 4110 (+20%)
1к2022 4230 (+8%)

3905 (+26%)

What's with the stocks

Investors didn't like the future slowdown, that's why Adobe's stock has fallen so much. This is the third significant decrease in a month.. From its maximum in November, securities have fallen in price by 18%.

Likely tightening of monetary policy puts pressure on expensive technology companies for several weeks. This week, the Fed said, that in 2022 expects to raise the interest rate more, than expected, right up to 0,9%. In this case, the yield of safer deposits and bonds will increase., but the risk premium for owning expensive and overvalued stocks will fall.

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It is for these reasons that some analysts change their estimates.. So, J. P. Morgan recently downgraded Adobe's rating from "buy" to "neutral". According to the bank, the company's shares do not have such great growth potential.

Given the recent drop in Adobe's securities since the beginning of the year, they have grown by 17%. Index S&The P 500 added over the same period 26%.

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