Adobe Drops As DOJ Preps Antitrust Lawsuit to Block Figma Deal

Adobe (ADBE:US) shares recorded the worst trading day in over 5 months after falling 7.63% on Friday. The plunge was fueled by a Bloomberg News report that the U.S. Department of Justice (DoJ) is preparing an antitrust lawsuit to block the company’s acquisition of Figma.

Shares initially fell over 5% in after-hours Thursday before extending the decline in Friday trading as traders see the $20 billion Figma deal as critical for Adobe’s future growth. The deal is also under scrutiny by regulators in the European Union and U.K. 

The Bloomberg report noted that regulators are concerned that the Adobe-Figma deal would limit options for creative professionals when choosing design software products. For SVB MoffettNathanson analyst Sterling Auty, the failure to complete the Figma deal would be a “material negative" for Adobe's growth.

"You would think a product named Creative Cloud would be in the cloud already, but it is not," Auty said. "The key functionality of Creative Cloud runs on devices as compared to competitor Canva that truly runs in the cloud and you access via a browser."

He added, "Adobe has already begun the development process to bring Creative Cloud to the cloud, but what Figma brings is the underlying architecture that is proven to scale."

Congress members were often trading Adobe shares lately. While representatives Josh Gottheimer and Ro Khanna were buying Adobe stock in January, their colleague Kevin Hern was on the opposite market side. Rep. Hern previously sold $250,000 - $500,000 worth of Adobe shares in December.

Similarly, Congressman Michael McCaul disclosed late last year that he invested in Adobe stock in November. Rep. McCaul reported two transactions - valued at $15,000-50,000 and $50,000-100,000 - when shares closed at $337.83. 

Following a bad trading day on Friday, Adobe shares closed the week at $320.54.