Adobe (ADBE  ) shares plunged more than 10% following the company missing analysts' estimates on the top-line and also issuing guidance that came in below expectations. Adobe and cloud stocks were among the best performers of the last decade, however these stocks did have a potent headwind in that inflation was quite low, short-term rates were at zero, and long-term rates were trending lower. Circumstances have changed in 2021.

Overall, Adobe's shares have had quite the turnaround over the past 3 weeks as they are down 19% following a breakout attempt to new highs on November 22. Shares are still up 13% on a YTD basis, but the company does face significant headwinds with short-term rates rising. Adobe is vulnerable to this because of its high multiples, including a price to sales ratio of 17.

Inside the Numbers

In its fiscal Q4, Adobe reported $3.20 in earnings per share which was a 14% increase from last year and was higher than estimates. Revenue increased 20% to $4.1 billion which topped estimates of $4.05 billion with the bulk of growth coming from the company's digital media segment.

Adobe provided revenue guidance of $4.23 billion for its fiscal first-quarter which fell short of expectations of $4.34 billion. For the full year, Adobe forecasts sales of $17.9 billion, which came in below analysts' consensus estimates of $18.16 billion.

In an interview with CNBC's Jim Cramer following the earnings report, Adobe CEO Shantanu Narayen expressed confidence in the company's long-term future. He said investors were making too much of the company's weak guidance and that it had more to do with foreign exchange fluctuations rather than a change in the underlying business. He also said that this week's quarter was only 13 weeks compared to the typical 14 weeks.

Weakness in Adobe infected other cloud and high-multiple SAAS stocks as the sector has been quite weak over the past month on valuation concerns triggered by rising short-term rates. The stock price's direction will likely be determined by what happens with short-term rates and whether the company can continue delivering double-digit earnings and revenue growth.