Adobe Earnings: What you Need to Know
Adobe Earnings: What you Need to Know
By:Mike Butler
The software company has exceeded EPS expectations four quarters in a row and exceeded revenue expectations three of the past four quarters
- Adobe is set to report quarterly earnings on Dec. 13.
- Adobe is expected to report EPS of $4.14 vs $3.98 the previous quarter.
- Adobe is expected to report $5.12 billion in revenue vs $4.87 billion the previous quarter.
Adobe (ADBE) has had nothing short of a glorious 2023, opening the year at $340.25 and almost doubling in price at its high. The stock reached an annual low of $318.60 on Feb. 24, and just made new highs at $628.60 on Nov. 29.
Experts expect the high-priced stock to still have some implied volatility attached to this earnings announcement, with more uncertainty looming. The stock is expected to have a +-$35.86 move this week from the earnings announcement, which is just over 5% of the current stock price.
Looking further to the rest of the year, we can see that the January 2024 options cycle has an expected move of +-$52.85 based on current implied volatility. This tells us that the expected move from earnings this week makes up a massive chunk of the expected move through the rest of 2023 and then some. So, we should expect to see some movement after the announcement is made on Wednesday.
Bullish on Adobe earnings
Adobe's strong digital media solutions business sector has led to substantial gains this year, and demand continues to grow as the world around us becomes even more digital somehow. With products like Adobe Firefly, Photoshop, and Lightroom having so much success, it's hard to see how Adobe could miss earnings expectations in a big way, but crazier things have happened.
Adobe has stockpiled revenue year over year, more than doubling the revenue figures we saw five years ago. Strong believers in ADBE stock may find a bullish narrative for earnings easy to land on.
Bearish on Adobe earnings
Like many other big-name tech stocks in 2023, there's always room for downside movement if the company doesn't smash earnings expectations, or if the positive sentiment wanes during the earnings conference call.
Either way, if you think Adobe has seen its high for the year, and you're not convinced that higher EPS and revenue expectations can be met or exceeded, we may see a downside move in ADBE stock if you're right.
Tune in to Options Trading Concepts Live on Wednesday, Dec. 13 at 11 a.m. CDT for a full deep dive into earnings strategies for Adobe ahead of the announcement after the stock market closes.
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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