Adobe Stock Drops 5.6% in 2025 After Q4 Earnings Beat but Guidance Falls Short

With over 25 years of expertise, Bill McColl has led teams across TV, radio, and digital platforms, producing and writing impactful news coverage on major global events.

Highlights

• Adobe’s Q4 2023 earnings and revenue exceeded analyst predictions, but its 2024 guidance disappointed investors.
• Increased pricing strategies may have dampened demand more than expected.
• The company faces a possible significant penalty linked to an ongoing FTC investigation.

Adobe Inc. (ADBE) experienced a 5.6% drop in intraday trading on Thursday following its fiscal Q4 2023 report. Despite solid earnings that beat forecasts, Adobe’s cautious outlook and regulatory risks weighed on investor confidence.

The company, known for flagship products like Photoshop and Illustrator, projects 2024 earnings per share (EPS) between $17.60 and $18.00, slightly below the $18 consensus. Revenue guidance ranges from $23.5 billion to $25.5 billion, falling short of the anticipated $27.5 billion.

Adobe’s CEO, Shantanu Narayen, acknowledged that recent price increases have likely affected customer demand more than initially forecasted but affirmed strong confidence in the company’s long-term growth prospects.

For Q4 2023, Adobe reported an EPS of $4.27 and revenue of $5.05 billion, marking a 12% increase year-over-year and surpassing market expectations.

Separately, Adobe disclosed ongoing cooperation with the Federal Trade Commission since June 2022 concerning compliance with the Restore Online Shoppers’ Confidence Act. The FTC recently indicated it may negotiate a settlement regarding this investigation.

Adobe maintains that its practices comply with legal standards but warns that resolving this matter could result in substantial financial penalties, potentially impacting future earnings and operations.

Despite the recent stock price decline, Adobe shares have gained nearly 75% in value throughout 2023.

Update—Dec. 14, 2023: This article was revised to clarify the reporting period described.

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