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The global software industry has experienced unparalleled growth over the past decade. With a diverse lineup of products and services, the demand for proprietary software seems ever-increasing. One subset of the broader software industry is multimedia software, which focuses on the creative industry and no company is as synonymous with this market as Adobe.
The multinational software company behind flagship products, such as Photoshop, Illustrator, Acrobat, Premiere Pro, and InDesign, has been a mainstay in the multimedia industry - offering valuable tools to millions of creative professionals around the world.
The company has grown to become one of the largest public companies on the United States stock market and experienced massive growth during the Covid-19 pandemic when millions of professionals worked from home due to strict lockdown measures enforced around the world.
This period gave Adobe the opportunity to greatly boost revenues and profits, but as the pandemic woes are now no longer an ongoing issue, Adobe stock has begun to normalize.
Investors may be wondering what the future holds for the company, as valuations return to pre-pandemic levels. If you are one of these investors, this guide from investfox is for you.
Adobe stock experienced massive growth during the Covid-19 pandemic. The stock rose from $220 in 2018 to almost $690 in 2021. However, after the lockdown measures were lifted and people returned to normal work settings, the stock started to correct itself. Still, Adobe stock has increased by over 60% over the past five years.
While a bulk of this growth has come from Adobe users working from home during the lockdowns, Adobe has managed to maintain an impressive growth momentum and is currently trading at a more favorable valuation.
In terms of financial performance, Adobe’s fourth-quarter results from 2022 show a healthy 9.22% increase in quarterly revenues YoY, while net earnings fell by only 1.5%. To $1.25 billion.
Net profit margin fell by 9.8% to 26.79%.
Adobe has a beta of 1.31, which makes it more volatile than the broader market, thus, representing solid opportunities for short-term traders and long-term investors alike.
While Adobe has bounced back from its $275 low in September 2022, the stock could be a solid buy closer to the $300-$330 range.
Dividend investors may be disappointed by the stock, as Adobe does not offer dividends to its shareholders. However, Adobe’s revenue streams are well-diversified and with a great growth track record, investors should look out for the stock in the near future.
Before putting your capital at risk, it is crucial to understand the inherent risks and opportunities associated with being an Adobe shareholder. Doing so can help you decide whether Adobe’s stock is a welcome addition to your portfolio.
Yes. Adobe is a public company and has been trading its shares on the Nasdaq exchange since 1986. The stock is a constituent of the S&P 500 and Nasdaq-100 indexes.
Adobe does not pay dividends on its stock and has never paid dividends, despite its consistent profitability and revenue growth.
Adobe’s 2021 highs are long gone and as of April 2023, the stock is trading at a more favorable valuation. However, the company as a whole is still considerably overvalued, which curbs the interest of most value investors.