1/6/25 - $adbe - Buyer <$430, but nuanced1/6/25 :: VROCKSTAR :: NASDAQ:ADBE
Buyer <$430, but nuanced
- at *almost* 20x sales (a hair above), it's not "easy" to buy a software co trading nearly 8x sales growing "only" high single digits and facing question marks about generative AI offer, monetization, "canva" threat etc.
- reminds a bit of NYSE:UBER in a different context, where there remains a ? around the 2-5Y outlook (software is exceptionally high duration so the marginal change in trajectory matters - and so far there's been no obvious resolution).
- but at nearly 5% FCF yield, growing high singles probably offers a pretty good entry. i'm opting for some shorter-dated ITM exposures (calls) as i've been doing lately w/ NYSE:TSM , NASDAQ:NVDA , NYSE:UBER among a few others and allows me to keep my book cashy. i'm also trying to expose myself in a way where i'm happy if it goes up and happy if it goes down (i am only buying - really ever - names where i can own it lower b/c of my work/ conviction).
- while NASDAQ:ADBE isn't near and dear to my heart, i still have the conviction that it's not going to be replaced too soon and has been making a ton of the leading efforts for digital copyrights for gen AI that are really necessary for enterprises/ serious businesses and commend them for doing this.
- i'm also not clear where/when the monetization engine gets flipped on, but honestly, id rather take the margin hit up front (so long as the biz remains doing 4-5% cash flow yields) such that growth and leadership can be maintained. so check.
- mkts remain bid for now. i've been selectively peeling off the wins into cash, but like starter positions in names like this that haven't participated to such an extent. it's not my first rodeo though. a name that hasn't worked and into a tape that gets dunked... gets dunked harder. and i want to be there to buy the "obvious" dip. so i'm treading carefully but like the LT horizon for risk here.
what do u think, anon?
V
