Key Points
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Anil Chakravarthy becomes CEO on Dec. 1, exactly 19 years after Shantanu Narayen took the job.
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Shares lost about half their value in the 12 months following the 2007 handover.
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This time the outgoing CEO isn’t leaving — Narayen becomes executive chair the same day.
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Adobe (NASDAQ:ADBE) has picked its next CEO. The company said on Sept. 3 that Anil Chakravarthy, the insider who runs its customer experience orchestration business, will become president and CEO on Dec. 1.
Shantanu Narayen, who has run Adobe since 2007, will move to executive chair the same day. The news landed after the market closed, and shares fell 6.7% the next day to $266.51 as of this writing — about 28% below the stock’s 52-week high.
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A change at the top is rare here: Adobe has handed the CEO job over exactly once in the past 19 years. Bruce Chizen resigned as CEO as of Nov. 30, 2007, and Narayen (then Adobe’s president and chief operating officer) took over the next day.
Chakravarthy steps in 19 years later to the day.
Here’s what the stock did after that first handover.
Image source: Getty Images.
The last handover came at a terrible time
The Adobe that Chizen passed along was thriving. Fiscal 2007 revenue rose 23% year over year to about $3.2 billion, and net income climbed 43% to about $724 million.
But the business ran on software licenses back then. Customers bought Creative Suite and Acrobat outright, and revenue depended on their appetite for the next upgrade.
That appetite was about to vanish. Narayen’s first trading day as CEO ended with the stock at about $42.
Twelve months later, shares closed at $21, a loss of about half. They went on to trade below $16 by March 2009. Two full years after the handover, the stock still sat around $36, down about 15%.
Was the new CEO the problem?
Narayen had little to do with that first-year collapse, in my view. After all, the Great Recession began in December 2007, the very month he took over. The S&P 500 (SNPINDEX:^GSPC) itself lost about 45% during his first 12 months.
Adobe’s business model made a bad stretch worse. When corporate budgets froze, customers skipped the upgrade, and the damage showed up on a delay. Revenue growth decelerated to 13% in fiscal 2008. Then revenue fell 18% in fiscal 2009 to about $2.9 billion, and net income dropped by more than half that year.
Zooming out makes the same point. From about $42 at the handover, shares have gained more than 500% over Narayen’s nearly 19 years. And the company he hands over is targeting $26.5 billion to $26.6 billion of revenue this fiscal year — more than eight times fiscal 2007’s total.
The next CEO starts in a better spot
The differences this time mostly favor the incoming CEO. Narayen isn’t leaving. Chizen, by contrast, exited the top job and stayed on as a strategic advisor for a year.
Narayen also telegraphed the change back in March, saying he would step down once the board picked a successor. And Chakravarthy, for his part, ran Informatica as its CEO from 2015 to 2020 before joining Adobe.
The business is arguably stronger, too.
Chakravarthy takes over $27.1 billion of annualized recurring revenue. In Adobe’s fiscal second quarter of 2026, which ended May 29, revenue grew 13% year over year, reaching a record $6.62 billion. Management raised its full-year targets in June.
Another recession could still hurt. But subscription revenue doesn’t vanish the way skipped upgrades did in 2008.
Not everything favors him, though. Friday’s sell-off wasn’t only about who got the job. David Wadhwani, who ran Adobe’s creativity and productivity business and was reportedly a contender for the job, is leaving the company.
And the worry that artificial intelligence will disrupt software makers, which has weighed on the stock since 2024, hasn’t gone anywhere. Narayen, not Chakravarthy, will still be CEO for Thursday’s fiscal third-quarter report, due Sept. 10.
Ultimately, I think this record says more about entry prices than about new CEOs. Investors who bought shares on Narayen’s first trading day as CEO paid about 26 times adjusted earnings for the fiscal year that had just ended, right as a recession was starting. Today, shares sell for about 9.5 times the fiscal 2027 earnings that analysts project, even though revenue is still growing at a double-digit rate.
Of course, Chakravarthy could still stumble, and the executive departures add uncertainty. But the last handover suggests the first year gets decided by the economy and the starting valuation, not the new CEO.
I wouldn’t sell Adobe over this transition. If anything, at this price, I’d rather buy than sell.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.
