Michael Burry, the investor known for his bet against the housing market before the 2008 crisis, argues that Adobe is being unfairly punished as investors ignore cash-generating companies in favor of flashy AI stocks with sky-high valuations. Adobe stock is down 48% over the last 12 months, pushing its forward price-to-earnings ratio to a multi-year low of 9.8 times, compared with a 10-year mean of more than 45 times. The company reported second-quarter revenue of $6.62 billion, up 13% from a year ago, and raised its full-year guidance to between $26.5 billion and $26.6 billion in revenue with non-GAAP earnings per share of $24.35 to $24.45. Adobe is shifting to a freemium model to expand its addressable market beyond creative professionals, growing its Business Professionals and Consumers segment from 700 million to more than 850 million customers in the past year and increasing creative freemium monthly active users from 50 million to 90 million. Analysts remain divided, with a consensus Hold rating and a mean price target of $276.19, representing a potential upside of 41% from current levels.
Adobe Systems IncorporatedBurry argues Adobe is undervalued with low P/E and strong fundamentals, implying a buying opportunity.
Meta Platforms Inc.