Adobe stock is going through a massive selloff, and trading at 2018 levels. I think the market is being a little panicky with Adobe and I partially agree that a $500 million ARR step-down by going freemium would obviously be concerning to shareholders.
But Adobe has done this before, and it's paid off well. Acrobat Reader was free for decades and became 850M+ MAU that now monetizes through AI Assistant and premium plans.
Adobe is has a very strong record at this very playbook. They are willing to bet that they can make Firefly and Express follow the same playbook at larger scale.
The following are not being priced in, in my opinion:
\- Adobe's Creative Agent is already inside ChatGPT and Claude.
\- AEP processes 70 billion profile activations a day.
\- AI-first ARR is growing 3x year-over-year above $ 500M.
I will be watching Q3 MAU growth and Firefly ARR sequentially. If those two numbers hold, the bet is paying off. If they don't, the step-down masks structural weakness. Thoughts?