Adobe’s December 1 leadership handoff is arriving at the worst possible moment. Anil Chakravarthy becomes president and CEO that day, with Shantanu Narayen stepping back to executive chair after 18 years running the company. The transition was telegraphed in March and confirmed on September 3, so markets have had months to price it in. What they may not have fully priced is what landed on GitHub five weeks ago.
PhotoCraft, a clean-room Photoshop rebuild written in Rust, went public on September 30 and reached roughly 76,000 stars by November 2. That is not a slow accumulation: the repo crossed 20,000 stars within hours of launch and 43,000 within days. Third-party GitHub tracking sites put it around the mid-250s globally by stars across all public repos, all time. It did that in five weeks.
The project comes from ArtCraft, a suite developed by software engineer Brandon Thomas, who says he rebuilt Photoshop and six other Adobe-style apps. The suite has been described in recent tech press as including PhotoCraft (Photoshop), LightCraft (Lightroom), FilmCraft (Premiere), EffectCraft (After Effects), DesignCraft (InDesign), VectorCraft (Illustrator) and PrintCraft (Acrobat). The code is released under MIT and Apache-2.0 licenses, with no subscription. PhotoCraft supports layered PSD workflows, is billed as early alpha, and the project’s own materials say missing areas include AI and generative features. It runs on Windows, macOS, Linux and in the browser via WebAssembly. But the velocity is what changes the calculus.
Adobe’s underlying business continues to grow. Creative and marketing subscription revenue hit $4.65 billion in fiscal Q3 2026, up 13% year over year, and total annualized recurring revenue exiting that quarter was $27.5 billion. The company raised full-year revenue guidance to roughly $26.6 billion and authorized a fresh $25 billion buyback earlier this year. Beats in Q1 and Q2 sent the stock lower both times. ADBE is down roughly 25% to 30% over the past 12 months. The 52-week range stretches from about $190 to $363.
The options market is not calm about where this goes. With earnings expected on December 9, eight days after Chakravarthy’s first full day as CEO, that event compresses two distinct uncertainties into a single week: a new leader’s first call and a quarter that lands into a market still skeptical that AI tools are helping rather than threatening the subscription model.
The Trade
The edge here is not in the quarterly number. Adobe beat in Q1 and Q2 and fell after both. The question heading into December is whether Chakravarthy’s opening remarks reframe the open-source threat credibly or leave it unaddressed. A new CEO with an enterprise data background has institutional credibility. If the December 9 call includes a direct answer on competitive positioning, the stock has room from $251 to its old range above $300.
A bull call spread into the December 19 expiration defines every dollar at risk before that event resolves. Buying the $260 call and selling the $285 call costs roughly $7 to $8 in premium with ADBE near $251, capping maximum risk at that outlay while targeting a spread that pays near $25 at full value. Implied volatility above 40% makes outright calls expensive. The spread takes the IV richness and turns it into a defined structure where time decay hits both legs. If the December 9 call disappoints and the stock slides, the loss is exactly what was paid. That is the only way to hold through a first-call binary with a long CEO transition layered on top.
The beat-and-drop pattern is not unique to Adobe. Stocks that have already priced in strong execution can fall even after clearing every consensus estimate.
What Kills the Thesis
Chakravarthy says nothing concrete about open-source competition. The quarter misses on digital media net new ARR, which has been the pressure point all year. PhotoCraft ships a major, more stable release before the earnings date and pulls another wave of press. Any of those three closes the spread worthless. Position sizing matters more than direction conviction here: this is event risk, not a trend trade.
The same skepticism weighing on Adobe’s AI subscription story runs through the broader enterprise software sector. Datadog’s consumption billing offers the clearest real-time signal of whether AI workloads are actually running at scale inside enterprise environments.
