Why Adobe Is Paying $20 Billion for Figma
Adobe (NASDAQ: ADBE) recently announced solid quarterly earnings results that met management's forecast. The software giant also affirmed a bullish full-year outlook that calls for strong sales and earnings gains through late 2022. But the stock still fell hard immediately following the report, which also included the surprise announcement that Adobe is making a significant acquisition.
Let's examine why Adobe has decided to shell out $20 billion for Figma, a web-based collaborative design platform, and whether the market's harsh response to this news was warranted.
The main benefit a Figma acquisition brings is another growth avenue. The collaborative work and design platform is positioned in an attractive niche that could grow to around $16 billion in annual revenue by 2025. Adobe expects the deal to boost its subscription-based revenue by $200 million this year before reaching an annual pace of $400 million by early 2023. "The combined company," executives said in a press release, "will have a massive, fast-growing market opportunity."
Source Fool.com
