Down 50% From Its Highs, How Should You Play Newly Public Figma Stock Here?

Figma (FIG) has been one of the most closely watched IPOs in 2025. The design software developer for disrupting digital collaboration soared during its first day trading last month, briefly clearing above a $55 billion valuation. Volatility has been the norm since then, as the stock has declined by close to half its peak. Piper Sandler initiated coverage on the stock last week on Wednesday at an “Overweight” rating and at an $85 price target, citing healthy growth patterns and secular tailwinds in digital design.

The timing comes amid heightened scrutiny of newly minted IPOs, many of which have struggled after early euphoria. While the S&P 500 ($SPX) has advanced steadily this year, investors in growth software names are navigating higher risk and reward swings. Against that backdrop, Figma is trying to prove it can convert hype into sustained growth, leveraging a large user base and early moves in AI-driven design.

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Figma (FIG) builds cloud design and collaboration software to enable real-time co-creation by teams. The San Francisco, California-based company competes in the wider SaaS and digital design sector, going up directly against Adobe (ADBE) and other productivity apps. With a recent market value of roughly $35.5 billion, Figma has rapidly become one of the biggest publicly traded design-centric software companies.

Shares have ranged from $67 to $142.92 in the past 52 weeks, with a current market capitalization of $37 billion. At Friday's close at $77.30, FIG remains well off IPO highs, lagging its group peers and the S&P 500 Index, up about 25% in the same time frame.

As of about mid-trading day Monday, FIG stock is down over 7%.

Valuation is complicated given the company's growth trajectory. On trailing metrics, Figma in the previous year generated $1.16 billion in revenue and $180.6 million in net income. That translates to a lofty enterprise value-to-sales multiple of around 30x, well in excess of the typical software peers. Analysts argue, however, that at ARR near $1 billion a decade after launch and free cash flow (FCF) expected to grow towards 30% by 2030, investors are paying for good growth optionality rather than near-term margins.

Story ContinuesFigma does not currently pay a dividend, and management has indicated that cash flow will be reinvested into expansion initiatives, including AI product rollouts and international growth.

Figma to Report Q2 Earnings on September 3

Most recently, Figma posted quarterly revenue of $228.2 million and net income of $8.6 million. Wall Street will be watching intently when the company posts Q2 2025 results on Sept. 3. Of greatest concern will be ARR growth, conversions from the free to the paid customer base, and whether new price changes introduced earlier in the year (a 20% to 33% increase in full-seat prices) are the reason for top-line acceleration.

Management has highlighted multiple growth levers beyond pricing: cross-selling new products, monetizing its 25 million monthly visitors and 13 million active users, and expanding globally. The company is also in the early innings of embedding AI into its platform. While ambitious product launches could temporarily pressure margins, Piper Sandler believes they position FIG for long-term upside.

With the volatility typical of the recent IPOs, investors can expect to see swings leading up to earnings. And with FIG stock down by almost half from the highs, September's execution can determine the direction for the next leg.

What Do Analysts Expect for FIG Stock?

Coverage of FIG is still limited, but Piper Sandler’s initiation sets the tone. The firm issued an “Overweight” rating with an $85 price target, suggesting modest upside of about 10% from current levels. While only two firms have published targets so far, Wall Street generally views FIG as a high-growth SaaS company in the early stages of scaling monetization.

Further, Piper Sandler analyst Brent Bracelin projects ARR could triple to more than $3 billion by 2030 while FCF margins expand toward 30%. That long-term outlook contrasts sharply with near-term volatility, leaving investors to decide whether to stomach the swings in pursuit of outsized gains.

 *On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com* 

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