Adobe to Buy Collaboration-Software Company Figma for About $20 Billion
Topic of the day
Adobe shares fell $62.39, or 17%, to $309.13 after the company agreed to buy collaboration-software company Figma for about $20 billion, in the technology giant’s largest acquisition. Adobe, which will pay for the company using roughly half cash, half stock, unveiled the deal with its quarterly results, which it pulled forward from a planned afternoon announcement after The Wall Street Journal began inquiring about an acquisition Wednesday. Adobe, which had a market value of about $174 billion as of Wednesday’s close, reported fiscal third-quarter net income of $1.14 billion on revenue of $4.43 billion, a 13% increase year-over-year. Adobe on Thursday also issued fourth-quarter revenue guidance that fell below Wall Street expectations, citing foreign-exchange headwinds tied to the run-up in the U.S. dollar. Figma specializes in cloud-based collaboration tools that help teams create and build web applications. Figma, based in San Francisco, was founded in 2011. Its products are akin to digital whiteboards in which designers and engineers can share design iterations and annotate them with feedback and suggestions. The closely held, venture-backed company was last valued at around $10 billion in June 2021, according to PitchBook. Adobe, based in San Jose, Calif., is best-known by consumers for software programs including Adobe Photoshop, Adobe Illustrator and Adobe Acrobat used for graphic design, video editing and more. It also has segments focused on analytics and marketing as well as publishing. Adobe’s shares are down around 45% so far this year while the Nasdaq Composite Index declined around 25%.
Despite spending much of the day's trading session in positive territory, the Switzerland stock market ended slightly down on Thursday as investors stayed wary of holding positions at higher levels. The benchmark SMI, which climbed to 10,837.10 around mid-morning, ended with a marginal loss of 7.70 points or 0.07% at 10,746.70, off the day's low of 10,714.59. Sika, Lonza Group and Richemont shed 2.2 to 3.3%. Partners Group and Givaudan both ended lower by a little over 1.5%. Logitech drifted down 1.04%. Roche Holding climbed 1.8%. SGS gained 1.2%, while UBS Group, Swiss Re and Zurich Insurance Group posted modest gains. In the Mid Price Index, Zur Rose tanked 10%. Clariant, Straumann Holding, Tecan Group, Temenos Group and VAT Group lost 3.2 to 4.3%. Sonova, Swatch Group, Ems Chemie Holding, BB Biotech and Lindt & Spruengli also ended sharply lower, whie Cembra Money Bank and Julius Baer posted moderate gains.
European stocks closed lower on Thursday as concerns about slowing growth, tighter monetary policy, and the energy crisis weighed on investor sentiment. The pan European Stoxx 600 drifted down 0.65%. Germany's DAX dropped 0.55% and France's CAC 40 ended 1.04% down, while the U.K.'s FTSE 100 edged up 0.07%. Switzerland's SMI ended 0.07% down. Other markets in Europe closed flat. Financials shares attracted buying following a Morgan Stanley analyst note upgrading the banking sector. Miners Antofagasta and Anglo American rose sharply after a flurry of Chinese cities announced measures to boost housing demand. However, Anglo American gave up its early gains and ended weak, while Antofagast closed on a firm note. Shares of e-commerce retailer THG plummeted more than 13% after the company reported a wider first-half loss. Renault, Accor, Publicis Groupe, Societe Generale and Sanofi were among the prominent gainers in the French market. Atos, Dassault Systemes, CapGemini, Hermes International, Kering, Essilor, LVMH and Carrefour shed 2 to 4.6%. In the German market, Puma ended more than 5% down. Adidas ended lower by about 4%. Brenntag, Sartorius, E.ON, Symrise, Covestro, Siemens Healthineers and RWE also ended sharply lower. Deutsche Bank gained nearly 2.5%. Zalando, Fresenius, Allianz, Merck and HeidelbergCement gained 0.6 to 1.2%. Spanish lenders Bankinter, Sabadell and Caixabank added 4.5 to 6% after reports that Madrid could modify a bank tax to avoid conflicts with the European Central Bank. On the economic front, U.K. consumer confidence slipped into negative territory for the first time since June 2020, while French consumer price inflation slowed less than expected in August, separate reports showed. The euro area trade deficit widened in July to the highest level since the series began in 1999, rising to EUR 40.3 billion in the month from EUR 32.2 billion in June, data released by Eurostat showed.
U.S. stocks dropped Thursday, with investors mulling how this week’s inflation report likely cements the Federal Reserve’s path to continue raising interest rates aggressively. The three major indexes fell at the open, rose briefly at midmorning and then fell again in erratic trading. The S&P 500 fell 44.66 points, or 1.1%, to 3901.35 after data showed a strong economy that could encourage the Fed to keep raising interest rates at a rapid pace. The tech-focused Nasdaq Composite dropped 167.32 points, or 1.4%, to 11552.36. The Dow Jones Industrial Average fell 173.27 points, or 0.6%, to 30961.82. On the economic front, retail sales rose 0.3% in August, the Commerce Department said Thursday, showing the resilience of U.S. consumers in the face of high inflation. U.S. applications for unemployment benefits declined for the fifth consecutive week as employers held on to their workers in a persistently tight labor market. A separate report on industrial production registered a slight downtick, dropping 0.2% from July, showing U.S. factories lost some steam. Railroad stocks fell, even after the White House said a tentative agreement had been reached to avert a shutdown on railways. Shares of Union Pacific edged higher by 41 cents, or 0.2%, to $218.36. CSX fell $1.06, or 3.4%, to $30.17. Elsewhere, NextEra Energy fell $2.87, or 3.2%, to $86.01 after saying it would raise almost $2 billion in equity. AIG's life insurance subsidiary Corebridge Financial (+0.5%) edged lower in its debut on the New York Stock Exchange on Thursday, having already entered the market at the lower end of its proposed range. The stock lost 1.5% to $20.68. AIG had placed 80 million Corebridge shares at a price of $21 each and raised $1.68 billion in what is the biggest US IPO so far this year.
Stocks in Asia mostly fell, with the Shanghai Composite Index extending its losses to 1.0 per cent and in Hong Kong the Hang Seng Index losing 0.4 per cent. The Kospi in South Korea is down 1.1 per cent. The Nikkei-225 in Japan declines by 1.1 per cent - weighed down by losses in the electronics and logistics sectors. Traders speak of recession fears and refer to the upcoming interest rate hikes in the USA. These, however, spurred on financial stocks, with Japan Post Bank and Dai-ichi Life Holdings rising by 1.1 and 0.7 per cent respectively.
The yield on the 2-year U.S. Treasury note climbed for a sixth straight trading session on Thursday, reaching its highest level since October 2007, as investors penciled in the likelihood of another large interest rate hike by the Federal Reserve next week. Thus, the rise in the 2-year rate outpaced that of the 10-year yield, leading to a more deeply inverted Treasury curve that’s seen as a worrisome sign of the outlook. The 10-year Treasury note rose 4 basis points to 3.453% while the 2-year Treasury note added 8 basis points to 3.844%.
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