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id: 286, Created by Iaroslav Semashko, Scout
Adobe Systems Incorporated
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On September 15, 2022, Adobe released 2 breaking news, particularly, announced earnings and a $ 20 bn. deal with online design tools maker Figma.
- The Company released a mixed Q3 2022 financial report that topped earnings, but sales were below expectations.
- At the same time, despite the weak and uncertain economic environment, Adobe decided to make a high-priced acquisition for $ 20 bn in cash and stock.
On this news, Adobe stock plunged more than 15% and lost over $25 billion of its capitalization, seriously damaging investors.
Moreover, back on September 13, 2022, the price of the Company’s shares lost 7% or about $13 billion of capitalization on No News.
Assessing the need for an expensive purchase of Figma, it is important to note that one of Adobe's flagship products, Adobe XD, could no longer compete with Figma. Even thoughAdobe XD was released earlier than its competitor and the Company had much more significant resources for product development, the competition was lost. As a result, the only way not to lose market share was to take over the Competitor at a high price.
Taking all the facts, history, and the respective market reaction into account, there are reasons to suspect that Adobe's Leaders have made and may be making faults in management and are trying to compensate for them at the expense of the Company and its shareholders.
Breach of Fiduciary duty,
Shock Event Date
15 September 2022