Everyone who’s used a computer in the past decade knows what Adobe is. If you poll a random sample of people on the street, most will say Adobe is the PDF Reader. It’s true, Adobe is best known for its PDF Reader apps like Adobe Acrobat. But take one look at Adobe’s portfolio and you will see that it has an extensive offering of creative software. Adobe started with PDFs, but now it is so much more. Let’s do an Adobe stock review.
Can You Make Money on Adobe Stock?
Adobe Inc. (NASDAQ: ADBE) is a multinational company that was founded in 1982 in Mountain View California. Most people probably aren’t aware that Adobe is a powerhouse of a stock, and one of the first SaaS companies on the market.
Adobe stock has a market cap of over $300 billion and shares trade at just over $650 per share. The stock is a component of both the S&P 500 and the S&P 100.
As well as the NASDAQ 100 which features some of the most prominent tech companies on Wall Street.
The growth of Adobe’s stock has been stunning since its IPO in 1986. If you happened to buy some shares on the first day of trading, your investment is up an incredible 298,445%.
Let’s say you just bought it five years ago, you’d still be up 543%. Year to date in 2021, Adobe shares have increased 35%, which outpaces the S&P 500 which has returned 21%.
Over the years, Adobe has been a compounding monster, and in a world that is growing increasingly digital, the company shows no signs of slowing down per our Adobe stock review.
Adobe’s Top Products
Adobe Acrobat Reader: Did you know that the company actually created the Portable Document Format (PDF)? The PDF is one of the most widely used formats for electronic documents in the world and most commonly opened and viewed with Adobe software. Whether it’s the free Adobe Reader or the paid Adobe Acrobat, PDF readers and Adobe are synonymous in what has become one of the company’s flagship products.
Adobe Photoshop: Adobe Photoshop was created back in 1988. The software platform is used to edit graphics and images. Photoshop has come a long way since its inception in 1988. Today’s version utilizes mobile phone integration, video editing, and tools for 3D printing.
Adobe InDesign: Adobe InDesign is used by content creators to design and produce things like magazines, eBooks, and newsletters. It’s a desktop publishing app that allows you to completely design the layout and theme for your project from scratch. InDesign is a premium product and comes with a monthly or annual subscription fee.
Adobe Premier: Premier is the video editing suite from Adobe and along with other apps like InDesign, make up the Adobe Creative Cloud. There are two main versions: Adobe Premiere Pro which is for professionals and Adobe Premiere Elements which is for consumers. This software isn’t just for editing your home videos. Adobe Premiere Pro has been used to edit Hollywood movies such as Deadpool, Gone Girl, and Terminator: Dark Fate. It’s one of the premier video editing platforms on the market.
Adobe Illustrator: Another product that was founded in Adobe’s infancy back in 1987. Adobe Illustrator is a graphic designer’s tool that has had over 25 different versions since it was originally created. Today, Adobe Illustrator comes with a mobile companion app called Adobe Illustrator Draw for both Android and iOS.
Adobe Stock Review of the Competition
Operating in the super-competitive SaaS industry means that our Adobe stock review shows a ton of competition. Although you may think it has the market for PDF Readers cornered, there are plenty of other companies that offer a similar product.
Adobe isn’t a cheap stock. So if you like the SaaS model for creative and enterprise software, check out these other stocks as well!
DocuSign (NASDAQ: DOCU): DocuSign is only an eighteen-year-old company and yet it seems to already be synonymous with digital signatures. The company’s much smaller than Adobe with only a $58 billion market cap. But the popularity of its products is growing.
Real estate transactions are one of the more common ways in which DocuSign is used. DocuSign utilizes a SaaS business platform that charges users an annual rate for a certain number of signatures it can allow.
DocuSign has the chance to grow, as more aspects of our lives go digital. Contract signatures, legal documents, and court submissions are just some of the ways in which DocuSign is branching out. It has a way to go. However, DocuSign is a serious threat to Adobe’s PDF signing tools.
Alphabet (NASDAQ: GOOGL): Talk about some major competition. While Google isn’t generally known as a SaaS business, if you have ever used the Google Chrome browser, you know it offers a product similar to Adobe Acrobat. Chrome has its own built-in PDF reader so you don’t even have to open the document with an Adobe product. That is where the similarities between the two companies stop, but going after Adobe’s biggest product is worthy enough of being a competitor. Especially when you have the power and history of Google.
Microsoft (NASDAQ: MSFT): From one mega-cap tech company to another. Microsoft is actually the world’s largest SaaS business. We don’t always think of it that way but think about the market share Microsoft has in enterprise software. Every computer that runs Windows and uses Microsoft Office is part of a subscription to Microsoft. The product overlap that most people utilize is converting Microsoft Word documents to PDFs in an Adobe product. In fact, Adobe Reader or Acrobat often comes pre-installed as the default PDF reader in all Windows computers. So in one way, the two companies are symbiotic, while in another, they are direct competitors for SaaS market share.
Apple (NASDAQ: AAPL): Oddly enough, a lot of Adobe’s early products were built specifically for the Macintosh computers. Today, the dichotomy between Windows and Apple computers is as strong as ever. Apple has its own software offerings now that come standard on every Macbook and Mac desktop computer. It offers Final Cut Pro for video editing, Graphics for graphic design, and its Photo app is an excellent photo editor. Apple is rapidly moving its focus from hardware to software and subscription services, and has a very powerful ecosystem that can eat away at Adobe’s market share. Keep that in mind in this Adobe stock review.
Adobe’s Creative Software Monopoly
As much as we can say all of those companies are rivals, Adobe really doesn’t have much competition. Adobe has had such a head start over its competition that its market share really can’t be disputed.
Users have been loyal to the brand for decades now, and the product quality is so high that they have no reason to leave. That is the beauty of SaaS businesses and why investors are so eager to invest in them.
If you have a great product, and people are willing to pay a subscription for it, then that is guaranteed recurring revenues for the foreseeable future.
So what’s so good about Adobe’s creative software? Products like Photoshop and Premier are synonymous with their industries. They have such a strong industry moat that no other software can really even come close.
Now that Adobe bundles its products together in the Adobe Creative Cloud, it is even easier for content creators to get access to multiple different products for one low price.
A good parallel to consider is Microsoft’s Windows operating system and its suite of Office software. Unless you are a diehard Apple user, Windows is basically the default operating system that we learn on.
Whether it’s at school or in our office, an estimated 80% of the world’s computers use Windows. Similarly, Adobe has just as dominant a market share of the creative software industry. This Adobe stock review has decided they’re a great buy.
Adobe Stock Review Conclusion
If you’re looking to buy shares of a SaaS company and can’t decide which stock to buy, Adobe is a good place to start. An Adobe stock review of the history and the returns of the stock are staggering. Even now, as a $300 billion company, Adobe continues to perform and return to its shareholders every year.
We saw just how rapidly digital transformation can happen during the pandemic. Adobe is at the forefront of this change. With a full portfolio of industry-leading applications, Adobe has as strong of an industry moat as there is. It may seem expensive, but I fully expect Adobe’s stock to continue to grow into the future. If Microsoft is the software comparison, then there is a chance that Adobe can eventually become a $1 trillion company down the road.