Earlier this month, Adobe (NASDAQ:ADBE) said they were acquiring Figma for a massive $20B.ADBE

is down 25% since the news — sending it down 51% for the year. Now that we’ve had time to digest, how do we feel aboutADBE

?

The biggest investor criticism…

… was that Adobe overpaid with a 50x sales multiple which is rare and expensive by most standards. On Wednesday, Adobe’s Chief Product Officer Scott Belsky tried easing concerns that Adobe would ruin a great product. Here’s what he had to say:

• Figma will remain on a freemium pricing model.
• Adobe will maintain Figma’s simplicity.

Belsky speaks from experience. His design community Behance was acquired by Adobe in 2012.

When it comes to design, Adobe has few competitors anywhere close to its size — essentially controlling the creative market. With Figma, it has even more power, with Canva being the next notable competitor.

The bear case: Creative destruction

Since the acquisition, several analysts have downgradedADBE

, while others have reiterated their buy ratings.

Beyond the acquisition, analysts are also worried about the future of Creative Cloud — Adobe’s suite of design and creative tools:

• Creative Cloud is an important product for Adobe — making up 59% of Adobe’s sales in the recent quarter.
• A recent BMO survey showed respondents having a higher willingness to switch from Creative Cloud to other competitive products (Barron’s).

Investors also aren’t happy that cash is being redirected from stock buybacks to a highly uncertain acquisition.

There’s “almost zero room for error” at such a high price, per Wells Fargo analyst Michael Turrin. If Figma fails to meet growth expectations,ADBE

investors will end up paying.

The bull case: Have faith in Narayen

Adobe has been a longtime success — outperforming the S&P 500 by a wide margin. In the past 20 years,ADBE

has returned ~2,700% (vs. the S&P 500’s 544%).

• Mark Moerdler — a Bernstein analyst with a strong track record — is on the bull side with a $345 target onADBE
  (24% upside).
• He thinks the sell-off is overdone, given Adobe’s business quality and the potential growth from the acquisition.

The company pumps cash with a 31% net income margin, and CEO Shantanu Narayen has a strong track record of execution that leaves investors with little doubt of his capabilities.