Adobe Inc. (NASDAQ:ADBE) shares nudged higher during Monday’s premarket session as traders digest fresh regulatory headlines around the company’s subscription and cancellation practices. The stock had slid 7.6% on Friday.
Details
On Friday, the Justice Department said it filed a proposed stipulated order that, if entered by the court, would resolve a case against Adobe and two employees, Maninder Sawhney and David Wadhwani.
The case is tied to alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA).
The proposed order requires Adobe to pay $75 million in civil penalties and provide customers $75 million in free services, for a total package valued at $150 million.
In the complaint filed in the U.S. District Court for the Northern District of California, the government alleged Adobe used fine print and inconspicuous hyperlinks to hide key subscription details, including an Early Termination Fee, and then made cancellations difficult through “convoluted and inefficient” steps, delays, and repeated offers and warnings.
The order also requires clearer disclosure of any Early Termination Fee and its calculation before enrollment, plus reminders for any free trial lasting longer than seven days before converting to a paid plan that includes an Early Termination Fee.
Earnings Snapshot
On Thursday, Adobe reported fiscal first-quarter revenue of $6.40 billion and adjusted EPS of $6.06, topping estimates of $6.28 billion and $5.87, respectively.
The company also disclosed a planned CEO transition, saying CEO Shantanu Narayen will step down after a successor is appointed while remaining board chair.
Adobe expects second-quarter revenue of $6.43 billion to $6.48 billion versus estimates of $6.43 billion and adjusted EPS of $5.80 to $5.85 versus estimates of $5.68.
Adobe affirmed its full-year revenue guidance of $25.90 billion to $26.10 billion versus estimates of $26.03 billion and adjusted EPS of $23.30 to $23.50 versus estimates of $23.50.
Technical Analysis
Adobe is trading 5.5% below its 20-day SMA and 19.8% below its 100-day SMA, keeping the intermediate trend pointed down even after the recent bounce attempt. Shares are down 37.57% over the past 12 months and are sitting much closer to the 52-week low than the high, which keeps longer-term sentiment cautious.
The RSI is at 32.85, which sits in neutral territory but is close enough to oversold to suggest selling pressure has been heavy. MACD is at -3.9558 versus a signal line of -5.0929, a bullish configuration that often shows downside momentum is fading even if price hasn’t reclaimed key moving averages yet.
RSI in the 30–50 range with a bullish MACD indicates momentum leaning bullish.
- Key Resistance: $285.50
- Key Support: $244.50
Benzinga Edge Rankings
Below is the Benzinga Edge scorecard for Adobe, highlighting its strengths and weaknesses compared to the broader market:
- Momentum: Weak (Score: 7.24) — The stock’s trend remains pressured versus the broader market, lining up with price sitting well below key moving averages.
- Quality: Neutral (Score: 47.38) — Fundamentals screen as middle-of-the-pack, suggesting the setup is being driven more by sentiment and trend than balance-sheet concerns.
- Value: Weak (Score: 25.22) — Even after the drawdown, the score implies the market still isn’t treating the shares as a clear bargain versus alternatives.
The Verdict: Adobe’s Benzinga Edge signal reveals a “weak-trend, mid-quality” setup. With Momentum (7.24) still depressed, bulls typically want to see follow-through above nearby resistance levels before treating the MACD improvement as a durable turn.
Top ETF Exposure
- SmartETFs Advertising and Marketing Technology ETF (NYSE:MRAD): 4.05% Weight
- iShares Expanded Tech-Software Sector ETF (BATS:IGV): 4.82% Weight
- Invesco BuyBack Achievers ETF (NASDAQ:PKW): 3.71% Weight
Significance: Because ADBE carries significant weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
ADBE Price Action: Adobe shares were up 0.37% at $250.25 during premarket trading on Monday. The stock is near its 52-week low of $244.28, according to Benzinga Pro data.
Photo by Mats Wiklund via Shutterstock
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