There has been a steep decline since start of this year. People are talking how others disrupt their business. But in fact there is no sign of significant slow down. They have moat and all they need to do is to plug good AI tools into their software and integrate that into users workflow. At this price level it’s definitely worth considering.
Really thoughtful breakdown of the risks and strengths here. What I find fascinating in situations like this is how the story often shows up first in the financial behaviour before it shows up in the narrative or the valuation. Watching how margins, cash conversion, and capital efficiency evolve from here might tell us whether this is a true undervaluation or a value trap well before the market fully reprices it.
Really enjoyed the depth of your Adobe analysis — the section on recurring revenue and switching costs is particularly well-articulated.
I’m curious about a few things:
How are you thinking about the speed of potential AI disruption vs. Adobe’s ability to adapt? Specifically, if Firefly adoption remains tepid whilst competitors release AI tools faster, what’s your re-evaluation trigger?
Also, your Autodesk/Intuit comp is intriguing — but doesn’t Autodesk face less low-cost competition (no “Canva for CAD”) whilst Adobe faces multiple credible challengers?
Finally, what’s your take on Adobe’s failed Figma acquisition — does that suggest management sees a bigger threat than the market appreciates, or does it not factor into your view?
Would love to hear your thoughts on these edge cases!
I’m less worried about who ships AI features first and more about whether Adobe’s customers keep paying for the products. My re evaluation trigger would be a slowdown in ARR or customer retention, or clear evidence that enterprise seats are declining because AI tools outside Adobe are replacing paid users. If Firefly adoption stays weak and competitors’ tools start replacing adobe's paid users the thesis breaks
Autodesk/Intuit comparison:
You’re right that Autodesk faces less low end competition. That’s part of why it deserves a premium. My point isn’t that Adobe should trade at the same multiple, but that the current ~50% discount feels overdone given Adobe’s similar recurring revenue quality and margins. Adobe’s competitive risk is higher, but not so high that it should be valued like a dying business.
Failed Figma acquisition:
I see it as management correctly identifying a real threat and It shows me they understand collaboration and web based design matter long term. The deal failing doesn’t change my view much; what matters more is how aggressively Adobe executes on web, collaboration and AI without Figma.
Good to connect. I’m new to Substack after trading in my PPE and tools, and I now write about markets, risk, and the stories we tell ourselves to stay comfortable.
After the Close is less about prediction and more about process. Discipline over drama. Thinking clearly when the screens go dark. The writing is partly a way for me to slow things down and stay honest, especially in a space that rewards noise.
If you ever have a moment to look through it, I’d genuinely appreciate any feedback on the process. Good or bad is fine. I can handle it.
Hi there , I traded in my PPE and tools and now I'm new to Substack. I write about markets, risk, and the stories we tell ourselves to stay comfortable. After the Close focuses on process over prediction, discipline over drama, and thinking clearly when the screens go dark. Appreciate a review of my process. Good or bad I can handle it. - Andrew
There has been a steep decline since start of this year. People are talking how others disrupt their business. But in fact there is no sign of significant slow down. They have moat and all they need to do is to plug good AI tools into their software and integrate that into users workflow. At this price level it’s definitely worth considering.
Definitely agree
Really thoughtful breakdown of the risks and strengths here. What I find fascinating in situations like this is how the story often shows up first in the financial behaviour before it shows up in the narrative or the valuation. Watching how margins, cash conversion, and capital efficiency evolve from here might tell us whether this is a true undervaluation or a value trap well before the market fully reprices it.
Really enjoyed the depth of your Adobe analysis — the section on recurring revenue and switching costs is particularly well-articulated.
I’m curious about a few things:
How are you thinking about the speed of potential AI disruption vs. Adobe’s ability to adapt? Specifically, if Firefly adoption remains tepid whilst competitors release AI tools faster, what’s your re-evaluation trigger?
Also, your Autodesk/Intuit comp is intriguing — but doesn’t Autodesk face less low-cost competition (no “Canva for CAD”) whilst Adobe faces multiple credible challengers?
Finally, what’s your take on Adobe’s failed Figma acquisition — does that suggest management sees a bigger threat than the market appreciates, or does it not factor into your view?
Would love to hear your thoughts on these edge cases!
AI disruption vs Adobe adapting:
I’m less worried about who ships AI features first and more about whether Adobe’s customers keep paying for the products. My re evaluation trigger would be a slowdown in ARR or customer retention, or clear evidence that enterprise seats are declining because AI tools outside Adobe are replacing paid users. If Firefly adoption stays weak and competitors’ tools start replacing adobe's paid users the thesis breaks
Autodesk/Intuit comparison:
You’re right that Autodesk faces less low end competition. That’s part of why it deserves a premium. My point isn’t that Adobe should trade at the same multiple, but that the current ~50% discount feels overdone given Adobe’s similar recurring revenue quality and margins. Adobe’s competitive risk is higher, but not so high that it should be valued like a dying business.
Failed Figma acquisition:
I see it as management correctly identifying a real threat and It shows me they understand collaboration and web based design matter long term. The deal failing doesn’t change my view much; what matters more is how aggressively Adobe executes on web, collaboration and AI without Figma.
Thank you for taking the time to clarify my question. It’s very much appreciated. I see your view point.
My thoughts:
https://substack.com/@mathoverbias/note/p-185099904?r=716aq6&utm_medium=ios&utm_source=notes-share-action
Always love to hear other opinions
Hi,
Good to connect. I’m new to Substack after trading in my PPE and tools, and I now write about markets, risk, and the stories we tell ourselves to stay comfortable.
After the Close is less about prediction and more about process. Discipline over drama. Thinking clearly when the screens go dark. The writing is partly a way for me to slow things down and stay honest, especially in a space that rewards noise.
If you ever have a moment to look through it, I’d genuinely appreciate any feedback on the process. Good or bad is fine. I can handle it.
Cheers, Andrew
Hi there , I traded in my PPE and tools and now I'm new to Substack. I write about markets, risk, and the stories we tell ourselves to stay comfortable. After the Close focuses on process over prediction, discipline over drama, and thinking clearly when the screens go dark. Appreciate a review of my process. Good or bad I can handle it. - Andrew