$MARSCOIN $ADBE Market’s mainstream reaction: After the earnings report, FCF profit margin is over 40%. The valuation is described as "cheap to dust," and selling puts and put credit spreads are being blown up as guaranteed easy money. But I think this is precisely a classic signal of a value trap—"cheap" is cheap for a reason, not because it’s been wrongly punished.
First, Adobe’s FCF quality is deteriorating. A 40%+ FCF margin is built on subscription-based, prepaid revenues and stock buybacks propping things up, but AI-native tools (products like Midjourney, Runway, and Sora beyond Firefly) are eroding the pricing power of its creative software. The market uses the "cheap" narrative to mask the growth ceiling.
Second, options data doesn’t lie. If it’s truly cheap, smart money should be buying calls aggressively. Yet in the recent rebound, ADBE’s put/call ratio has risen instead, and the implied volatility skew has kept tilting toward puts. Institutions are hedging downside, not bottom-fishing. Selling puts here is picking up pennies while a road roller is running over them.
Third, the macro backdrop isn’t cooperating. Today’s news shows hawkish signals from the Fed and Warsh’s remarks weighing on the stock market—this is the first time since 2023 that rate-hike expectations have been heating up. High-valuation growth stocks are the first to suffer as rates rise, and ADBE’s "cheap" is cheap relative to its own past, not relative to the current rate environment. BTC current price $NVDAB
Fourth, historical precedent: In 2022, Meta was also once described as "dirt cheap," only to fall another 40% before hitting a bottom. Cheap is never a reason to buy—catalysts are.
What do you think? Feel free to share different views in the comments section
First, Adobe’s FCF quality is deteriorating. A 40%+ FCF margin is built on subscription-based, prepaid revenues and stock buybacks propping things up, but AI-native tools (products like Midjourney, Runway, and Sora beyond Firefly) are eroding the pricing power of its creative software. The market uses the "cheap" narrative to mask the growth ceiling.
Second, options data doesn’t lie. If it’s truly cheap, smart money should be buying calls aggressively. Yet in the recent rebound, ADBE’s put/call ratio has risen instead, and the implied volatility skew has kept tilting toward puts. Institutions are hedging downside, not bottom-fishing. Selling puts here is picking up pennies while a road roller is running over them.
Third, the macro backdrop isn’t cooperating. Today’s news shows hawkish signals from the Fed and Warsh’s remarks weighing on the stock market—this is the first time since 2023 that rate-hike expectations have been heating up. High-valuation growth stocks are the first to suffer as rates rise, and ADBE’s "cheap" is cheap relative to its own past, not relative to the current rate environment. BTC current price $NVDAB
Fourth, historical precedent: In 2022, Meta was also once described as "dirt cheap," only to fall another 40% before hitting a bottom. Cheap is never a reason to buy—catalysts are.
What do you think? Feel free to share different views in the comments section
