Adobe Accelerates, but Shares Drop 15% on Future

Earlier this week, David Gibbs posed the question, “Can Adobe Continue to Ride Good News out of Apple?” The good news is Adobe beat estimates for the 12th quarter in a row. The bad news is shares are plummeting after-hours on investor skepticism of what’s in store for Adobe. Here’s the Q3 earnings breakdown:

Earnings: Q3 profits of $.54 vs. $.49 consensus and $.26 in Q3 last year. Profits jumped 107% Year-over-Year.

Revenue: Increased 42% Year-over-Year at $990.3 Million vs. $985 Million consensus, blowing away expectations. Last year, Adobe generated sales of $697.5 Million in the same quarter, so this year’s quarter is a drastic improvement and another sign of the economy’s improvement.

“Strong performance in each of our major businesses contributed to record revenue and strong earnings in Q3,” said Shantanu Narayen, president and CEO of Adobe.  “We remain bullish about Adobe’s long-term role in enabling the transformation of content and applications across industries.”

Comment: Shares of Adobe (ADBE) are trading down big following the company’s earnings release after-the-bell , trading at $27.87 per share, compared to today’s closing price of $32.94 per share.

Based on the chart above, Adobe (ADBE) shares are now trading below both their 50-day and 200-day moving price averages — a negative sign for the stock. Adobe (ADBE) issued mixed guidance for Q4,  earnings per share of $0.48-0.54 vs. $0.53 consensus Q4 revenues of 950 Billion – $1 Billion vs. $1.03 Billion consensus. Either Adobe is setting up Wall Street for a big potential upside Q4 surprise or the company is finally cooling off from a year-over-year double digit rise in numbers. Right now, investors seem to think Adobe (ADBE) is undeserving of a brighter future ahead as shares are down 15% after-the-bell.