Adobe (NASDAQ:ADBE) will announce its earnings on Thursday, June 12, 2025. Historically, the stock has shown negative reactions the day following earnings announcements. In the last five years, Adobe’s stock has declined in 70% of cases, with a median drop of 7.4% and a maximum one-day loss of 16.8%.
For traders focused on events, recognizing these historical trends can provide a competitive edge. You have two primary strategies to think about:
- Pre-earnings positioning: Assess the historical probabilities and take a position prior to the earnings release.
- Post-earnings positioning: Analyze the relationship between immediate and medium-term returns following the earnings release, and then modify your position accordingly.
Analysts anticipate Adobe’s earnings to be $4.97 per share with sales of $5.8 billion. This reflects an increase from the same quarter last year, during which earnings were $4.48 per share on revenue of $5.31 billion. Although the company’s subscription business has been thriving and is likely to boost sales this quarter, revenue growth in the generative AI sector has lagged behind expectations. It will be intriguing to observe how this trend evolves in the forthcoming report.
Regarding the fundamentals, Adobe currently boasts a market capitalization of $180 billion. Over the past twelve months, the company has generated $22 billion in revenue, with $8.0 billion in operating profits and a net income of $6.8 billion. If you’re looking for upside with lower volatility than individual stocks, the Trefis High Quality portfolio offers a viable alternative — it has outperformed the S&P 500 and achieved returns surpassing 91% since its inception. Also, check out – A Smart Bet On Adobe Stock Ahead Of Earnings?
See earnings reaction history of all stocks
Adobe’s Historical Odds Of Positive Post-Earnings Return
Here are some insights on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 6 positive and 14 negative one-day (1D) returns noted. In total, positive 1D returns were observed approximately 30% of the time.
- Interestingly, this percentage rises to 33% if we look at data for the last 3 years instead of 5.
- The median of the 6 positive returns is 3.9%, whereas the median of the 14 negative returns is -7.4%
Additional information about observed 5-Day (5D), and 21-Day (21D) returns post earnings is provided along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A strategy with relatively lower risk (though not effective if the correlation is weak) is to investigate the correlation between short-term and medium-term returns post earnings, identify a pair with the highest correlation, and execute the suitable trade. For instance, if 1D and 5D display the highest correlation, a trader can take a “long” position for the next 5 days if the 1D post-earnings return is positive. Below is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D pertains to the relationship between 1D post-earnings returns and following 5D returns.
Is There Any Correlation With Peer Earnings?
Occasionally, the performance of peers can impact the post-earnings stock reaction. In fact, the price adjustment might start before the earnings are disclosed. Here is some historical data comparing the past post-earnings performance of Adobe stock with the stock performance of peers that reported earnings just prior to Adobe. For an equitable comparison, peer stock returns are also represented as post-earnings one-day (1D) returns.
Discover more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (a combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), providing substantial returns for investors. Additionally, if you are seeking upside with a more stable experience than an individual stock like Adobe, consider the High Quality portfolio, which has surpassed the S&P and achieved >91% returns since its inception.
Read the full article here
