Adobe drops 16% on reaction to $20B Figma deal and mixed outlook
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Adobe (NASDAQ:ADBE) shares dropped by more than 16% Thursday after the creative-software company said it would acquire collaborative design platform developer Figma for $20B, and also gave a mixed bag of a business update.
Adobe (ADBE) said the Figma deal would be half cash, half stock, and that Figma Chief Executive Dylan Field and company employees would also receive 6M additional Adobe (ADBE) restricted stock units that will vest over four years following the closure of the deal.
The deal's announcement sent Adobe (ADBE) shareholders into selling mode early, as the company said it expects Figma to add to the company's earnings by the third year after the deal's completion, which suggested Adobe's (ADBE) earnings may see a negative impact from the deal for two years.
Figma specializes in what it calls a "web-first collaborative design platform" that allows employees to use digital tools together on various types of projects.
Evercore analyst Kirk Materne said that for Adobe (ADBE), "there is a lot to like" about Figma, and that Adobe (ADBE) likely did the deal out of a sense of necessity.
"While we think the acquisition makes strategic sense, let's be honest," Materne said. "It feels like Adobe was losing some momentum to Figma and it was better to buy them out and combine forces."
Along with announcing its Figma deal, Adobe (ADBE) also said that for its fiscal fourth quarter it expects to report earnings, excluding one-time items, of $3.50 a share on sales of $4.52B, while analysts had forecast earnings of $3.47 a share on $4.6B in revenue. 
Adobe (ADBE) also said that for its fiscal third quarter it earned $3.40 a share, excluding one-time items, on $4.43B in revenue, compared to analysts' forecasts for earnings of $3.34 a share, on $4.44B in sales.
A handful of Wall Street analysts had downgraded Adobe's (ADBE) shares earlier this week ahead of the company's earnings report.