Adobe Inc will buy startup Figma for about $20 billion in its biggest deal, bulking up on applications that support online collaboration amid a global shift to hybrid working.
Investors were not persuaded, driving down Adobe’s stock by 17%.
Many of them said they understood the rationale around the strategy but argued Adobe overpaid for a company that was valued at about $10 billion in a private fundraising round a little over a year ago.
David Wagner, portfolio manager and equity analyst at Aptus Capital Advisors, which owns a 1.5% stake in Adobe, said Figma’s annual recurring revenue (ARR) was $400 million was a tiny fraction of Adobe’s $14 billion, making it an unreasonable for Adobe to pay the equivalent of 11% of its market value for 2.8% more ARR.
“We’re disappointed with the price paid for the company (Figma),” said Wagner.
Adobe said it expected the deal to be accretive to its earnings three years after its completion. It added that Figma’s total addressable market would reach $16.5 billion by 2025 across design, whiteboarding and collaboration.
Meanwhile, Adobe’s fourth-quarter revenue forecast of $4.52 billion came in below the $4.58 billion estimated by analysts, according to Refinitiv data.
Third-quarter profit also fell nearly 6%, reflecting the hit from a stronger dollar and higher costs.
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