Adobe tumbles on M&A news

Adobe (ADBE.US) stock fell over 16.0% during today's session after the digital media and marketing software revealed plans to acquire software design startup Figma Inc. for approximately $20 billion. The company also posted upbeat Q3 adjusted EPS figures.

• "With Figma, we believe we have a unique opportunity to usher in a new era of collaborative creativity,” said CEO Shantanu Narayen.

• The deal, which is expected to close next year, includes a $1 billion break-up fee for both sides, with Figma CEO Dylan Field expected to continue leading the group when its folded into Adobe. 

• Acquisitions news overshadowed Q3 figures. Company earned an adjusted $3.40 a share on sales of $4.43 billion, while analysts polled by FactSet expected earnings of $3.35 a share on sales of $4.44 billion. On a year-over-year basis, Adobe earnings rose 9% while sales increased 13%.

• However weak guidance also weighed on investors sentiment. Adobe's Q4 revenue forecast of $4.52 billion came in below the $4.58 billion estimated by analysts, according to Refinitiv data as strong dollar headwinds continue to weigh on overseas sales.

Despite recent sell-off, Adobe has a Moderate Buy consensus rating based on 15 Buys and six Holds assigned in the past three months and average stock price target of $452.86. Source: tipranks

Adobe (ADBE.US) shares plummet 16.0% and are having their worst day since 2010. If current sentiment prevails, pandemic lows at $255.00 may be at risk. Source: xStation5