Adobe (ADBE) stock saw heavy selling pressure Thursday after its fiscal year 2025 earnings and revenue projections come up short of analyst expectations.
The company released its latest earnings results after the close on Wednesday.
For the most recent quarter, Adobe beat revenue and earning per share expectations. The company reported earnings per share of $4.81, which was $0.14 better than The Street’s target.
Revenue for the quarter came in above expectations at $5.6 billion compared to analysts’ target of $5.539 billion. That revenue number reflected year-over-year growth of 11.1%.
The company’s stock would normally trade higher on those results, but the market is reacting to Adobe’s forward-looking guidance.
Management sees a tougher 2025 as their outlook for generative AI revenue comes in lower than what investors expected. That news is shifting sentiment towards Adobe as some investors have been looking for confirmation of lofty valuations of some AI companies.
Adobe shares traded as much as 14% lower to test what will be a critical price level.
Investors had bid the shares more than 8% higher in the week ahead of last night’s earnings report, indicating a “buy the rumor” rally that has now turned to selling the outlook.
The stock’s lows on Thursday reached $475 which is the exact price that the stock found support at in early November. The same price served as support for the stock in April, compounding the importance of it holding as short-term support.
The situation becomes more serios with Adobe’s bearish 50-day and 200-day moving averages looming just above the $500 level.
Over the short-term, investors can expect to see a “dead cat bounce” from the $475 price that is likely to be reversed as Adobe shares target a move to $400 or lower.
Adobe shares hold a “Bearish” outlook.
