ADBE provides software for creative designers, marketers, application developers for creating, managing, measuring, optimizing and engaging with content. Adobe surprised the markets with the deal to buy Figma for 20B (50 times annual revenue) in a combination of cash and stock, Figma was last valued at 10B in 2021. Adobe also disappointed the markets with the slightly lower guidance for the 4th quarter than expected and was punished with a 20% drop in price. Fair value estimate stands at $550 and Adobe is a world class company so yes we are buying the dip in ADBE. The deal won't close until 2023 pending regulatory approval and things will be a bit muddy for analysts in the next few quarters, while they digest the impact of absorbing the new company. This uncertainty however creates opportunity. All else being equal, and we believe they still are (the marginally lower guidance is uneventful noise), with adobe losing 35B to the news investors are getting a Figma for -$15B. Figma is not a clinical trial, or an oil field, that the company will have to invest billions in the coming years, that risk is off the table.

Technicals - ADBE has a history of reversing quickly after steep sell offs. The market in general but especially for large cap tech is not on its side however as things are starting to roll over again. With support around 300 and multiple support levels below traders can look for a reversal into resistance and gap fill to 350-360 area.