Strangely, Adobe (ADBE) has become one of the most expensive tech stocks around.
Adobe Inc. (NASDAQ: ADBE) shares were trading at $391.01 on 6 May 2022. Interestingly, Mr. Market has paid more for Adobe in the recent past. For instance, Adobe was trading at $554.37 on 3 January 2022. Adobe hit a high of $687.49 on 29 November 2021. Moreover, Adobe was trading at $490.70 on 4 May 2021.
Such high prices encourage investors to ask if Adobe is worth $391.01? Well, Adobe is growing. Stockrow estimates Adobe’s revenues grew 8.43% in the quarter ending on 28 February 2022 and 19.74% in the quarter ending on 30 November 2021.
Is Adobe Making Money?
Adobe (NASDAQ: ADBE) is making money. It reported a quarterly gross profit of $3.692 billion, a quarterly operating income of $1.58 billion and quarterly revenues of $4.246 billion on 28 February 2022.
Adobe is growing. Adobe’s quarterly gross profit grew from $3.424 billion on 28 February 2021. The quarterly operating income grew from $1.454 billion on 28 February 2021. Similarly, the quarterly revenues grew from $3.916 billion on 28 February 2021.
Adobe generates cash. The company reported a quarterly operating cash flow of $1.769 billion and a quarterly ending cash flow of $2.739 billion on 28 February 2022.
Adobe had $4.701 billion in cash and short-term investments on 28 February 2022. The cash and short-term investments fell from $4.963 billion on 28 February 2022.
Adobe pays enormous amounts of debt. It had a quarterly financing cash flow of -$2.604 billion on 28 February 2022. However, Adobe’s total debt is stable. The company’s Total Debt fell from $4.707 billion on 28 February 2021 to $4.665 billion on 28 February 2022.
What Value Does Adobe have?
Adobe’s value does not justify the $421.01 4 May 2022 stock price. Adobe’s total assets were $25.976 billion on 28 February 2022. The total assets grew from $24.985 billion on 28 February 2021.
I do not think Adobe’s internet footprint justifies the stock price. For example, the Adobe Creative Cloud had 12 million users in 2017, Statista estimates. Statista projects the number of subscriptions to the Creative Cloud could grow to 19.74 million in 2024. In contrast, Adobe claims the Creative Cloud had 26 million paid users in December 2021, ProDesignTools reports.
Some of Adobe’s products are popular. Adobe claims people used 300 billion PDFs in Adobe products in 2021. In addition, Adobe claims the Adobe Document Cloud processed over eight billion electronic and digital signature transactions in 2021. They claim Adobe’s creative community had over 29 million members in May 2022.
Adobe claims over 460,000 developers and others use its Adobe Experience Cloud. Additionally, they claim over 4,000 solutions and partners participate in the Experience Cloud. They claim Adobe Analytics analyzes over trillion visits to US websites and over 100 product SKUs in 18 categories to support ecommerce.
The Adobe Experience Cloud is Adobe’s ecommerce solution that uses artificial intelligence to analyze transactions, market workflows, content, audiences, and customer experience.
Is Adobe a Good Investment?
I think Adobe (ADBE) is a great company with an overpriced stock. I advise investors to stay away from Adobe until its stock falls to a realistic price.
Unfortunately, I think Adobe’s share price has a long way to fall. I think Adobe is worth around $100 a share, not the $491.01 Mr. Market paid for it on 6 May 2022.