Core Viewpoint - Figma's IPO was highly anticipated, with shares initially gaining nearly 158% on the first trading day, but have since declined approximately 55% as of September 8, raising questions about its investment potential following its first earnings report [3][4]. Company Overview - Figma operates in the digital design market, which is largely dominated by Adobe, a company valued among the top 10 software stocks globally [5]. - The company generated nearly $900 million in revenue over the last 12 months and has a self-estimated total addressable market of $33 billion, indicating less than 3% market penetration and significant growth potential [8]. Product Advantages - Figma's platform allows for real-time collaboration between creative and coding teams, offering a more efficient alternative to Adobe's solutions, which can be cumbersome for collaborative projects [7]. Financial Performance - In Q2, Figma's sales grew by 41%, slightly exceeding analyst expectations, but the stock fell nearly 20% due to a significant miss on earnings per share [9]. - The company reported a positive adjusted operating margin of 5% and an adjusted free cash flow margin of 24%, with expectations of 37% revenue growth for the full year [10]. Customer Metrics - Figma's net dollar retention rate among customers with annual recurring revenue of $10,000 or more was 129%, with customers spending 29% more than in the prior year's quarter, indicating strong product value [11]. Market Sentiment - Following Figma's Q2 report, Wall Street analysts lowered their price targets by an average of 15%, with a consensus price target of approximately $67.50, suggesting around 28% upside from the stock's closing price on September 8 [12]. - Figma's market cap was around $25.7 billion as of September 8, which is close to the $20 billion acquisition offer from Adobe in September 2022, with current quarterly revenues approximately 90% higher than at that time [13][14].
Should You Buy Figma Stock After Its 55% Post-IPO Drop?