Adobe shares fell by 11?ter a weak forecast

Adobe Systems Inc. shares declined significantly in price after yesterday's publication of the company's quarterly report, which, despite exceeding analysts' expectations, did not satisfy investors with its forecast for the next quarter. The concern was caused by competition from startups in the field of artificial intelligence.

On the postmarket, Adobe's share price fell to $508, which is 11% lower than at the close of major trading on March 14. The share price has not dropped to such values since October 27 of the previous year. On the day of trading on March 14, the company's shares fell by 0.54% to $570.45, which is 4.4% lower than the beginning of the year, while the main S&P 500 market index increased by 8% over the same period. It should be noted that Adobe shares increased by 77% in 2023.

According to the results of the first fiscal quarter ended March 1, 2024, Adobe reported record revenue of $5.18 billion, which is 11% higher than a year earlier. Adjusted earnings per share were $4.48, beating analysts' forecasts. Despite this, the company's net profit decreased from $1.25 billion to $0.62 billion.

For the second quarter, Adobe forecasts revenue in the range of $5.25 billion to $5.3 billion, slightly below analysts' expectations. The earnings per share forecast is in line with analysts' forecasts. The company also announced a $25 billion share repurchase program.

Analysts have expressed concern about the threat from AI startups. In response, Adobe is actively integrating AI technologies into its products such as Photoshop and Illustrator. Nevertheless, shareholders expect greater financial impact from the introduction of new AI functions.

In addition to competing with AI startups, Adobe is facing pressure from long-time competitors, including Canva. This also explains the lag of the company's shares from the general market, according to analysts.