Figma Drops 56% Since Going Public: Hold or Fold the FIG Stock?

Core Insights - Figma (FIG) shares have declined 56.3% since going public on July 31, underperforming the Zacks Computer and Technology sector's return of 11.4% and the Zacks Internet Software industry's decline of 1.3% [1][10] - The company's modest growth prospects and investments in AI-powered products are expected to impact margin expansion in the near term [1] Product Innovations - Figma launched four new products at its annual Config conference, including Figma Make, Figma Draw, Figma Sites, and Figma Buzz, effectively doubling its product offerings [3] - Figma Make allows designers to create fully functional prototypes using existing designs or natural language, enabling faster app development and direct web publishing [4] - Figma Draw introduces over 20 new tools for enhanced design capabilities, while Figma Buzz aids marketing teams in asset creation [5] User Engagement and Customer Base - The company has implemented new features to enhance user engagement, including improved navigation and integration with ChatGPT for AI-generated diagrams [6] - As of June 30, 2025, Figma had 11,906 paid customers with over $10,000 in annual recurring revenues (ARR) and 1,119 customers with over $100,000 in ARR [7] Financial Guidance - Figma expects Q3 2025 revenues between $263 million and $265 million, indicating a 33% year-over-year growth, which is a slowdown from the previous quarter's 41% growth [8][10] - For the full year 2025, revenues are projected between $1.021 billion and $1.025 billion, suggesting a 37% year-over-year growth [11] Competitive Landscape - Figma has underperformed compared to peers like Adobe, Microsoft, and Atlassian, which have seen smaller declines in their stock prices since July 31 [13] - The company faces significant competition from established players with advanced AI initiatives, while Figma's AI efforts are still in early stages [16] Valuation and Market Position - Figma shares are considered overvalued, reflected by a Value Score of F, and are currently trading below the 50-day moving average, indicating a bearish trend [17][19] - The company holds a Zacks Rank 4 (Sell), suggesting that investors should avoid the stock at this time [20]