Just went Photo-shopping… picked up a multibillion-dollar startup. Adobe, the Microsoft of the creative world, agreed to buy design-software company Figma for a cool $20B — its largest acquisition by far. Figma’s cloud-based software helps engineers and designers collab on web interfaces in real time (think: a digital whiteboard). Investors weren’t impressed:
Doing some Acrobat(ics)… Adobe has snatched up companies, including Workfront ($1.5B) in 2020 and Frame.io ($1.3B) in 2021. Previously, its largest splurge was Marketo in 2018 ($4.7B). Now Adobe is making a purchase four times that size at a time when dealmaking has slowed big time. See: inflation, econ uncertainty, volatile markets. Adobe says Figma’s customers will expose it to a new user segment and a total addressable market of $16B.
When under threat, you might overstretch… Adobe’s splurge may be more of a need-driven move than a smart buying opportunity. Figma competes toe to toe with Adobe’s XD program. Instead of sparring with it, Adobe’s eating it. Investors worry it’s overpaying out of desperation to quash competition, and yesterday the stock had its worst day since 2010.