After a long drought, the initial public offering (IPO) market seems to be springing to life. After more than 1,000 companies debuted on the public markets during the exuberance of 2021, the ensuing three years have been comparatively quiet, with 181, 154, and 225 IPOs in 2022, 2023, and 2024, respectively. With approximately half of 2025 in the rearview mirror, we've already seen nearly 200 IPOs, putting the current year on a pace not seen in quite a while.
One of the most anticipated debuts is from the creative software company Figma, which is expected to go public as early as late July. If that name sounds familiar, it's likely because of the attempted 2022 acquisition by rival Adobe (ADBE -0.39%) that was terminated after antitrust concerns. Let's take a look at both companies to see which is more deserving of investors' capital.
How we got here
When Adobe announced its plan to acquire Figma, much commentary was generated about the move and its associated price tag of $20 billion. To some, it seemed like an expensive but necessary move to bring a rival's software offering under Adobe's suite of products. To others, it was an admission that Adobe was losing ground to newer entrants in the creative software space. In the end, it didn't end up mattering as the deal fell apart and Figma remained private.
Since the merger was terminated in December 2023, Adobe's stock has fallen by 38%. Meanwhile, Figma is seeking an IPO valuation of $13 billion, about $7 billion shy of the price Adobe was willing to pay.
Image source: Getty Images.
Software showdown
Figma offers web-based collaborative design tools that can be used for a variety of design tasks, including creating flyers, mobile app interfaces, and web designs. At its core, Figma offers many of the same tools available to subscribers of Adobe's creative suite of software, including applications like Photoshop and Illustrator.
However, the focus should be on how the products differ. Figma is web-based, meaning it will work in a web browser. Adobe's products are applications that need to be downloaded. There is also a substantial collaboration feature offered by Figma that doesn't exist in the Adobe suite.
It doesn't take a tech genius to see how a product that allows users to easily work on any device that has a web browser while seamlessly collaborating with others would be a compelling challenger to an incumbent like Adobe. That said, there's more to consider before making a bet on this new IPO.
Adobe has a substantial reputational and incumbency advantage. In the professional world and at the enterprise level, the Adobe software suite is substantially entrenched. That's not to say it can't be disrupted, but it's an uphill climb.
Additionally, both Figma and Adobe are building AI features into their products. Considering the cost of implementing AI, it's worth considering how much of a burden this would have on a smaller company like Figma compared to the deeper-pocketed Adobe.
The bottom line for investors
There's a case to be made that a web-based collaborative platform like Figma is perfectly positioned to take share from the entrenched Adobe. In that sense, the excitement around Figma's IPO makes sense. Buying shares of Figma at its expected market cap of $13 billion puts a potentially longer runway for growth in front of the company. By comparison, Adobe's market cap is nearly $158 billion.
However, it's likely too early to declare the downfall of Adobe. Its incumbency advantage will be tough to disrupt, and as long as the race for AI continues, those spending requirements favor Adobe and its larger size and strong balance sheet.
