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Is the Adobe Stock Launch Bad News for Shutterstock? - Analyst Blog

While Adobe SystemsADBE launched Adobe Stock, a brand new stock photo service, Shutterstock, Inc. SSTK slumped 5.2% on the last trading day to settle at $60.12.

Is there a connection between the two events? Before reflecting on the effect of the release on Shutterstock, let's see what the new service is all about.

What's Adobe Stock?

It is a brand new stock photo service, which capitalizes on the company's acquisition of the Fotolia stock agency, closed less than six months ago. Adobe Stock is a stock image service, which is incorporated directly into the process of content creation and the creative tools that creators use every day.

The service is a part of Adobe Creative Cloud and is deeply integrated with Creative Cloud tools like InDesign, Photoshop and Premiere Pro. All these features simplify the process of buying and using of stock content, including photos, illustrations and graphics.

The users will be allowed to launch the Adobe Stock feature inside the Photoshop and choose the image that they want to edit. This will save them from the trouble to license images every time, as Adobe will send the users a watermarked print of these images and they may license it later on as per their needs.

Designers can edit a watermarked image in an application and when licensed, these changes are automatically saved to the full-resolution image that has been purchased. Also the watermark can be removed later on and they may edit the purchased image.

Adobe Stock gives users ready access to 40 million photos, vector graphics and illustrations directly from their CC desktop apps. For the time being, Adobe Stock only features images but the company is seeking to spread out this service to video and other formats before long.

It is available in 36 countries and 13 languages as a standalone stock service through which designers and marketers can download, buy and sell stock images. It is also available to users who are not Creative Cloud members yet.

Why Did Shutterstock Stutter?

Shutterstock, founded in 2003, is a royalty-free stock photography, footage, videos and music provider. It is now the leader in the space where it considers Fotolia, Dreamstime, Corbis Corp., Google GOOGL Images and Flickr as its potential competitors.

Shutterstock investors are naturally concerned about this launch although it was more or less as expected given that Adobe recently acquired its rival. But this isn't all: Adobe's CC users are some of the biggest users of stock images, videos and so forth, so Shutterstock is likely to lose this business entirely (unless maybe it competes very aggressively on price).

Moreover, in order to encourage photographers and designers to contribute content to Adobe Stock, the company has assured that it will offer top-of-the-market rates, thus pulling in content providers.

Looking at what Adobe Stock has to offer, any Adobe customer who has thus far used Shutterstock would no doubt move to Fotolia given its superior products. So Shutterstock could well be squeezed out of the market.

While Shutterstock carries a Zacks Rank #4 (Sell), Adobe has a Zacks Rank #3 (Hold). A better-ranked stock in the sector is Aspen Technology, Inc. AZPN , sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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