The action is brought on behalf of all persons or entities who purchased or acquired Adobe common stock between July 23, 2021 and September 15, 2022, inclusive (the “Class Period”). The action is captioned Pembroke Pines Firefighters & Police Officers Pension Fund and the City of Hollywood Police Officers’ Retirement System v. Adobe Inc., Shantanu Narayen, John Murphy, Daniel Durn, David Wadhwani and Jonathan Vaas, [Case number: The civil action number is: 1:23-cv-09260; SDNY]
The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Specifically, Adobe is a software company that offers tools for sharing documents, editing pictures and designing web pages. Its competitors include Figma, a company that provides a web-based design tool. Figma experienced rapid revenue and market capitalization growth just prior to the beginning of the Class Period, and Defendants were repeatedly questioned during the Class Period about whether Figma would pose a serious threat to Adobe’s financial success. Defendants repeatedly misled investors to believe that Figma did not pose a serious threat, and in fact could actually be beneficial to Adobe as it might attract more users who would begin with Figma’s products and graduate to Adobe’s.
Adobe thus shocked its investors when, on September 15, 2022, it announced that it had agreed to acquire Figma at a price of $20 billion – double Figma’s valuation and a multiple of 50 times its revenue. Investors learned for the first time that they had been misled. Contrary to Defendants’ statements, Figma did pose a major threat to Adobe’s financial success. The threat was serious enough that Adobe agreed to an astronomically overpriced acquisition of Figma in order to stifle any competition. News that Adobe would acquire Figma sent the price of Adobe’s stock down by 17%.