Skeptical on Adobe's recovery via AI; views bounces as sales zones and expects further downside.

Uh Brett says, "Oracle and Adobe, let's see those premiums at the open." Two of the big earnings reports. Adobe gapping down. We'll see what that uh how that pretends for the rest of the day here.

The next stock on our list is going to be Adobe. The ticker is ADBE and it was down 3.07% in the pre-market despite posting better than expected third quarter fiscal 2026 results.

Okay. Uh, next stock here. I wish it was as rosy, but it isn't. It's going to be Adobe. We'll start with the chart here real quick. We'll actually back out so you can really get an appreciation for what Adobe has done here.

In fact, I'll go to a weekly just so we can see it a little bit better. Look at this humongous runup that lasted six, seven years. Now, we've really kind of started a downtrend and we've retraced about 60 plus% of that move. question is is do we end up going lower here uh for Adobe?

What's the next move? You can see if we go back to the daily, we bounced off that recent low, recaptured the 200, but we're coughing it up here today. Coughing it up here today.

And we'll see if we're actually beneath the 50 as well and the 100. So, it sure looks to me 210ish and 200 probably next here for Adobe.

Now, let's actually go through the report here. They did report robust Q3 uh or a robust Q3, excuse me, and they did raise guidance, but the stock fell anyway. Oh, no. Say it ain't so.

Adobe ticker ADBE shares continue to fall Friday despite reporting better than expected third quarter financial results on Thursday after the market closed. Adobe reported adjusted earnings per share of 613, which beat the consensus estimate of 609.

In addition, the company reported revenue of 6.76 billion and that beat the consensus estimate of 6.69 billion. Total customer group subscription revenue was 6.56 billion. That represents a 14% year-over-year growth.

Business professionals and consumer subscriptions revenue was 1.91 billion. That was up 16% year-over-year. While creative and marketing professional subscription revenue was 4.65 65 billion, up 13% year-over-year.

Quote, Adobe delivered record Q3 results, reflecting the strength of our AI innovation, expanding customer reach and leadership across creativity, productivity, and customer experience.

End quote. That was from Shantanu Narian, chair and CEO of Adobe. goes on to say, quote, "Reaching a landmark of more than 1 billion monthly active users is a defining moment for Adobe, and I have confidence that anal will build on this momentum to drive Adobe's next chapter of growth and innovation in the AI era." End quote.

Total Adobe annualized recurring revenue exiting the quarter was 27.5 billion. Remaining performance obligations were 22.16 billion and current remaining performant obligations represent 67% of that total.

The company repurchased approximately 9.5 million shares during the quarter. Adobe raised its fiscal year 2026 adjusted earnings per share guidance from a range of 2435 to 2445 to a new range of 2445 to 2450 versus the consensus of 2436.

The company also raised its fiscal year 2026 revenue guidance from a range of 26.5 billion to 26.6 6 billion to a new range of 26.57 billion to 26.62 billion. That was verse the consensus of 26.5 billion.

For the fourth quarter, Adobe sees adjusted earnings per share of 630 to 635 versus the consensus of 632 and revenue of 6.8 billion to 6.85 billion. That's verse the consensus of 6.84 billion.

So what do you think on Adobe? Do you think that um you think Adobe is going to come in uh continue to come in? I should say it's already come in substantially. Do you think that's going to continue?

Do you think that there's a bounce here? And I guess more importantly, more linked to the business and the fundamentals, do you think that AI can actually help it dig itself out of this hole? I'm a bit skeptical on that.

Um, we actually had a discussion on happy hour about how there are many free programs now um that kind of do 80 to 90% of what the Adobe subscriptions do. And then I I mean I don't know about you folks, I'm not necessarily a graphics designer, but when I've ever wanted to do something fun with a picture, like make my cat wink at somebody or create a an image that's designed to get some laughs, I use AI.

I don't do I don't use any of the Adobe suite to do that. So, you'll have to let me know what you think here on Adobe.

Uh Matthew says, "Is your cat messing with your bird?" No, my bird is singing. My bird is singing to uh a track of bird songs. He's in a different room down the hallway. You guys can still hear it.

That's wild. Uh hopefully it's not too distracting. Bird's super happy, though. Um Adobe. So, uh Sit says, "Adobe calls for 250 was 955. I'd bet against that." Uh Jay says, "I haven't used anything Adobe in about a decade.

That tracks with what I'm saying." Uh and my own personal experience thinking about it.

Great to see you here. Why didn't I listen to myself and take Adobe short in 2024? It was clear to me then. And and you know what? I mean, I don't want to just kind of cast that off as hindsight is 2020.

You're right though because even even back then in happy hour when we first started talking about chat GPT and what this could mean and what it can do and all of that when we were talk about hey what kind of companies would be displaced from AI and this whole you know thing that that's that's swelling up here the two names that always surfaced to the top were Adobe and into it and so both of those have got massively hit thinking about it thankfully you have uh done well in other areas areas.

So, I'm sure there will be a another uh another opportunity for you there.

So let's take a look at Adobe. Okay, so you know, I've never been a big fan of Adobe. Um most I I'm first the truth be told. I'm a knucklehead with tech.

So listen, I I know where my wheelhouse is. So if if we take a look at Adobe again, what it's done is continually drift down just over and over and over and over again. We had a huge uh sell order come in.

Somebody sold 3,000 of the November um when is this one? 260. Is that 360? 260. Yeah. They sold 3,000 at the 260s. I'm sure they were sweating it a little bit, but now not looking so bad.

What's the overall trend on the week? It's sideways. Look at this moving average. So, what do we expect? I expect a test of those lower edges.

Now, if Adobe comes out and says, you know what, we're we're changing our models for revenue stream. we're going to do XYZ. They've got to fully embrace some sort of MCP, some sort of something that can revolutionize their work or or I see, you know, every bounce as a sales zone.

So, that being said, I'm going to use 300 as that top and 200 as the bottom. And you might go, "Oh god, here she comes again with another iron condor." But here's the thing. They're not sexy.

They are the granny panties of the options world.