Michael Burry Calls Adobe Undervalued After 48% Drop as Freemium Push Lifts Reach
Updated
Updated · Barchart · Jun 21
Michael Burry Calls Adobe Undervalued After 48% Drop as Freemium Push Lifts Reach
1 articles · Updated · Barchart · Jun 21
Summary
Adobe has become one of Michael Burry’s latest contrarian picks, with the investor arguing the stock is mispriced after a 48% 12-month slide driven by fears that generative AI will erode traditional software subscriptions.
9.8 times forward earnings is now Adobe’s valuation, versus a 10-year average above 45, even after the company posted Q2 revenue of $6.62 billion, up 13%, and raised full-year guidance.
850 million business professionals and consumers now use Adobe products, up from 700 million a year earlier, as the company shifts toward a freemium model aimed at converting broader AI-era users into paying customers.
90 million creative freemium monthly active users, up from 50 million, underpin management’s bet that Firefly and free entry-level tools can expand Adobe beyond creative professionals to hundreds of millions more users.
38 analysts still rate Adobe only a consensus Hold, though the average price target of $276.19 implies 41% upside, showing Wall Street remains split on whether the freemium transition can unlock the stock’s depressed valuation.