Adobe DCF sensitivity analysis

I won't bore y'all with bull/bear convictions on Adobe. The truth is, nobody can tell the future and I don't have a crystal ball. *But what I do have are a very particular set of skills. Skills I have acquired over a very long career.* Unfortunately they're not as cool as Liam Neeson's. It's financial modelling. I can build models. Adobe DCF sensitivity analysis Price/share, 10% discount rate |2026–2030 FCF CAGR|\-8% terminal|\-5% terminal|\-2% terminal|1% terminal|4% terminal| |:-|:-|:-|:-|:-|:-| |6%|$160|$180|$210|$260|$350| |8%|$180|$200|$240|$290|$390| |10%|$190|$220|$250|$310|$420| |12%|$200|$230|$260|$330|$450| |14%|$210|$240|$280|$340|$470| I'm neither a bull nor a bear. Just a dude trying to figure out what this thing is really worth these days. I think this kind of analysis is helpful to illustrate one thing: value is incredibly sensitive to your growth expectations. When Adobe was trading in the $600s, the valuation was not necessarily insane. At the time, Adobe was growing FCF at astronomical rates: well above 20% so you could justify a very high stock price with aggressive, but not totally absurd, assumptions: high near-term FCF growth and a healthy terminal growth rate. **Today, the question is different.** FCF growth appears to be slowing. Year-to-date FCF is up around 9% YoY, and a 12%+ FCF CAGR through 2030 no longer looks like something you can just casually assume. It may happen, but it now requires a real view. **And that cuts both ways.** You don’t need crazy assumptions to argue the stock is still overvalued. Something like 6% FCF CAGR through 2030 and a -5% terminal decline gets you to roughly $180/share in my model. But you also don’t need to be off your rocker to buy it. If Adobe can grow FCF around 10% through 2030 and remain roughly flat thereafter, the stock starts to look compelling. So from my perspective, the big sell-off is not obviously unwarranted. Five years ago, Adobe looked like a company that could only grow, win, and print money. Today, it is at least conceivable that the business could begin shrinking within the next decade. That’s really all it takes to cut a stock by two-thirds: the market moving from “this compounds forever” to “maybe this starts declining.” The bulls are right that today’s AI tools do not cleanly replace Adobe’s core products. They are also right that the valuation metrics look optically attractive. But the question is not really today. The question is: what about five years from now? What about ten? Nobody knows now, and nobody knew then. But in 2020, it barely felt like a question. Today, it is the only question.