What's Happening With Adobe Stock?

Group 1: Merger Announcement - Getty Images and Shutterstock have agreed to merge, creating a company valued at $3.7 billion, with Getty shareholders owning 55% of the new entity [1] - Craig Peters, the current CEO of Getty, will lead the combined company, which is expected to generate annual cost savings of$ 150 million to $200 million [1] - Following the merger announcement, GETY stock rose by 25% and SSTK stock increased by 14% on January 7 [1] Group 2: Competitive Landscape - The combined entity of Getty and Shutterstock will create a stronger competitor against Adobe, which has a smaller collection of over 300 million assets compared to the 470 million assets each of Getty and Shutterstock [2] - The demand for images and videos is increasing due to the adoption of generative AI, with Adobe already offering AI-generated images through its Firefly AI tool [2] Group 3: Adobe's Financial Performance - Adobe's revenue increased by 11% year-over-year to$ 21.5 billion in fiscal 2024, with the digital media segment growing by 12% to $15.9 billion [4] - Despite the growth in subscription revenues, Adobe's AI advancements have not yet translated into significant revenue growth [4] Group 4: Stock Performance and Valuation - Adobe's stock has experienced volatility, with returns of 13% in 2021, -41% in 2022, 77% in 2023, and -25% in 2024 [5] - Currently, Adobe's stock is trading at approximately$ 420, which is 9 times trailing revenues, compared to its average price-to-sales ratio of 15 times over the past five years, indicating potential undervaluation [6]