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ADBE stocks fall as Figma deal faces antitrust lawsuit


adobe (ADBE) stocks fell on Friday on news that the US Department of Justice plans to block the software giant’s $20 billion acquisition of Figma. ADBE stock fell more than 7%.




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Bloomberg report by the end of Thursday that the Justice Department is preparing to file an antitrust lawsuit against the deal as soon as next month. The deal is also facing antitrust reviews in the European Union and the UK

The Justice Department is concerned that Adobe’s acquisition of Figma will reduce options for design software used by creative professionals. Adobe makes software applications such as Photoshop, Illustrator, Premiere, and Acrobat.

Adobe announced intention to buy Figmaa web-first collaborative design platform, in September. At the time, analysts thought the $20 billion purchase price was too high.

ADBE stocks fell after the report

In the morning trade on stock market todayADBE stock fell 7.7% to 320.20.

William Blair analyst Jake Roberge said investors are concerned that an antitrust lawsuit could lead to distraction and enforcement problems for Adobe’s core business.

“While we acknowledge that the protracted legal dispute related to the Figma acquisition adds an extra level of complexity to Adobe’s story, we continue to be long-term believers,” said Roberge. long into stocks”. He rates ADBE stock as superior.

SVB analyst Sterling Auty of MoffettNathanson said if the Figma deal were blocked, it would be a “significant negative” for Adobe’s growth. The acquisition will remove two years from the development roadmap to make Adobe’s Creative Cloud suite fully cloud-native.

“You would think that a product called Creative Cloud is already available in the cloud, but it is not,” says Auty. “Creative Cloud’s core functionality runs across devices compared to competitor Canva which actually runs in the cloud and you access via a browser.”

He added, “Adobe has already started the development process to bring Creative Cloud to the cloud, but what Figma delivers is the underlying architecture that has proven to be scalable.”

Auty rates ADBE stock when the market is active, or neutral.

Big Tech in Regulatory Vision

US antitrust regulators under the Biden administration have sought to block other acquisitions by major Tech companies, including Microsoft (MSFT) and the owner of Facebook Meta . Platform (META).

In December, the Federal Trade Commission filed an antitrust lawsuit to block Microsoft’s $68.7 billion purchase of the video game publisher. Activating blizzard (ATVI).

Earlier this month, the FTC failed in an attempt to stop Meta from buying virtual reality fitness startup Inside.

ADBE stock ranks fourth among six stocks in IBD’s Desktop-Software industry group, according to Check IBD Stocks. It has an intermediary IBD Composite Rating out of 60 out of 99. The IBD Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or higher.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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