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id: 286, Created by Yaroslav Semashko, Scout
Adobe (ADBE) Figma Acquisition Case
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S.D. New YorkCourt
- In September 2022, Adobe announced the acquisition of Figma at $20B, or 50 times its revenue.
- $ADBE plunged 17% and lost over $25B of its shareholder value.
- Investors suspect Adobe downplayed the financial threat posed by the Figma merger.
On September 15, 2022, Adobe released two breaking news - disappointing earnings and a $20B Figma deal.
- 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 $ 20B in cash and stock.
On this news, $ADBE plunged over 15% and lost over $25 billion of its capitalization, seriously damaging investors.
Moreover, back on September 13, 2022, $ADBE 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 though Adobe 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
20 October 2023
Lead Plaintiff Deadline
19 December 2023