Investors in design software giant Adobe Inc. can't revive claims that the company downplayed the threat it faced from competitor Figma Inc. before announcing a $20 billion deal to buy the rival, a Manhattan federal judge has determined, finding that the investors' new allegations regarding the company's market-size hypotheticals wouldn't have misled reasonable investors.

In an order Friday, U.S. District Judge John G. Koeltl denied the Adobe investors' bid for leave to amend the proposed investor class action, holding that the fresh parts of their proposed rewrite should meet the same fate as the claims he dismissed in March.

According to Judge Koeltl, "the plaintiffs recite exactly the same alleged false and misleading statements that they alleged in the first prior complaint — no more and no less — except they have added a new category of alleged false and misleading statements."

Those new statements concern what's dubbed the total addressable market, or the total annual revenue Adobe would see if it could beat all competition for its suite of design applications, Judge Koeltl said.

The plaintiffs planned to allege that Adobe misled investors by overstating the total addressable market for its Creative Cloud software by including the market in which Adobe competitor Figma sold its products.

The investors reasoned that Adobe knew or should have known that it couldn't capture the portion of the market controlled by Figma and its market estimates should have reflected that reality.

Judge Koeltl poured cold water on that reasoning with his order Friday.

"The plaintiffs' argument fails because it erroneously assumes that Adobe's [total addressable market] estimates reflect the share of the market that Adobe might actually capture," the judge said.

To illustrate that finding, the judge noted that in 2018, the company's revenues were just more than $9 billion, but in the same year, the company's total addressable market calculation for 2022 was $128 billion.

That year, the judge said, "no reasonable investor would have understood Adobe to be representing that in just four years' time, Adobe would capture market share amounting to ten times its current revenues."

The order Friday ends investor claims that Adobe "feared the significant threat Figma posed not just to Adobe's [user interface/user experience] design tool, Adobe XD, but also to its flagship products, Photoshop and Illustrator."

To address the alleged threat, the investors claimed, Adobe worked secretly to acquire Figma, ultimately offering $20 billion, a "shocking" sum that the investors described as the highest price ever paid in a deal of its kind.

Following the announcement of the proposed acquisition, Adobe investors saw "$30 billion of market capitalization" wiped out, a reaction that allegedly showed a negative response to Adobe's "inability to organically gain share in Figma's expanding market."

The acquisition plan was later abandoned following scrutiny from the United Kingdom Competition and Markets Authority and the U.S. Department of Justice, but the inventors claim at that point, "the damage was already done" in that the company had revealed its vulnerability to competition, the complaint said.

When he dismissed the suit in March, Judge Koeltl found that the investors had failed to show any actionable misstatements or knowledge of wrongdoing with their claims that the company hid competition struggles.

"For one thing, plaintiffs fail to allege that competition from Figma caused Adobe's premier products any lost sales or decline in revenue and the plaintiffs conceded at the argument of the current motion that they did not point to any concrete losses," the judge said at the time.

Counsel for Adobe declined to comment Monday and counsel for the investors did not immediately respond to requests for comment.

The investors are represented by Samuel H. Rudman, Robert M. Rothman, Joseph Russello, T. Alex B. Folkerth and Joshua D. Forgy Robbins Geller Rudman & Dowd LLP and Jeremy A. Lieberman, Emma Gilmore, Villi A. Shteyn, Orly Guy and Eitan Lavie of Pomerantz LLP.

Adobe is represented by Andrew B. Clubok, Kevin M. McDonough, Jooyoung Yeu, Corey A. Calabrese and Brent T. Murphy of Latham & Watkins LLP.

The case is In re Adobe Inc. Securities Litigation, case number 1:23-cv-09260, in the U.S. District Court for the Southern District of New York.