Adobe Hits 1 Billion Users but Wall Street Stays Bearish
Adobe crossed one billion users and set revenue records, yet Morgan Stanley kept its Underweight rating and $240 price target.
Adobe just dropped a headline number that most companies would kill for: one billion total users. The software giant hit that milestone in its fiscal third quarter, alongside record revenue and the fastest user growth in its entire history. On paper, that's a banger quarter.
But Morgan Stanley isn't buying it — literally. The firm held its Underweight rating and kept its price target locked at $240. The bear case centers on what Adobe *didn't* change: full-year guidance for recurring revenue growth and operating margins stayed flat. That's a red flag when the street expected management to raise the bar after blowout user numbers.
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The analysts are also watching remaining performance obligations, a forward-looking revenue signal, and they don't like what they see — deceleration. Toss in some leadership uncertainty and you've got a stock that's hard to get excited about from an institutional standpoint, regardless of the flashy user count.
Here's the real trade question: a billion users sounds massive, but how many are actually paying? Adobe's freemium model pulls in eyeballs, not necessarily dollars. Converting free users to paid subscribers is the whole game right now, and that story hasn't proven itself yet. Until monetization kicks in meaningfully, that user milestone is more marketing than margin.
If you're holding ADBE, the bull case exists — but you're betting on a monetization unlock that hasn't arrived. Morgan Stanley is essentially saying show me the money first. Continue reading at Yahoo Finance Singapore.
