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Buy Or Fear Figma Stock At $78?
FigmaFigma(US:FIG) Forbes·2025-08-08 13:00

Core Viewpoint - Figma's IPO was highly successful initially, with stock prices tripling on the first trading day, but has since seen a decline of nearly 40%, currently valued at over $38 billion, raising questions about its valuation and growth potential [1][3]. Financial Performance - Figma reported revenue of $228.2 million for the quarter ending March 31, representing a 46% year-over-year increase, leading to an annual revenue run rate of $913 million [4]. - The company achieved net income of $44.9 million in the last quarter, with adjusted operating margins at 17% and free cash flow margins at 24% for 2024 [4]. - Figma's Net Dollar Retention rate is 132%, indicating strong customer loyalty and increased spending [4]. Valuation and Market Position - Figma's valuation stands at over 40 times estimated 2025 run-rate revenue, significantly higher than mature peers like Adobe, which trades at around 7.5 times forward sales [3]. - Despite its rapid growth of approximately 40%, the high valuation leaves little room for error compared to other high-growth SaaS companies like Snowflake, which trades at about 15 times forward revenue with projected growth of 25% [3]. Business Model and Strategy - Figma employs a seat-based pricing model that supports a product-led growth strategy, allowing organic adoption across teams, which reduces acquisition costs and shortens sales cycles [5]. - The company maintains a balanced cost structure, with R&D spending nearly equal to sales and marketing, focusing on product innovation rather than aggressive sales tactics [5]. Future Outlook - Figma is expanding its offerings beyond design tools to become a broader collaboration hub, with recent developments in presentations and no-code web development [6]. - The company faces competitive pressures from Microsoft, Canva, and AI-native tools, which could impact its market position [6]. - Figma's long-term success depends on its ability to broaden its customer base beyond designers and leverage generative AI for growth [7]. Potential Risks - The expiration of Figma's post-IPO lock-up in January 2026 may lead to increased selling pressure on the stock as a large number of shares could enter the market [8].