Key insights
- A former Adobe employee suggests a potential short-term bullish outlook on ADBE due to unrealized AI competition and struggling startups. Catalysts include a possible CEO change and the limitations of current AI creative tools. Bearish concerns involve Adobe's AI model ownership, potential shift to usage-based pricing, and failure to adapt to agentic workflows. Leadership issues are highlighted as a key problem.
Hey folks,
A friend of mine worked for Adobe for 4 years and left them 2 months ago. He texted me the following when I asked about his opinion about investing in ADBE. Thought I would share that here since there is tons of discussion about ADBE. Verbatim text:
“”” I was big bear on ADBE stock 1-2 year ago. But I am turning into a semi bull for it as short term gain. A few catalysts you can look forward too: 1) maybe ceo change would change the outlook and rejuvenate Adobe a bit. 2) the promised AI being able to replace creative tools has not realized to a meaningful amount. It is still only usable for funny videos and memes. 3) lot of video and image startups in this space are struggling to compete with OpenAI and Google because of how difficult it is to get PMF in this field. 4) prompt based editing is not the flow that professional Creators or enterprises will rely on 5) diffusion models scaling is difficult and models are 1/100 the size of LLMs to date.
Bear case: 1) Agentic workflows could demand new tools which Adobe might fail to adapt to 2) ADBE does not own best models so what would be its pricing power 3) seat based pricing might turn into usage based pricing which could be bull or bear case whichever way you might want to look into
A few turnarounds like Datadog, Hubspot etc could turn the story in favor of SaaS again and led to multiple expansion. I am not at Adobe anymore but I do know Adobe has a serious leadership problem which could possibly be solved with a new CEO. CFO and DME President at completely incompetent.