Core Viewpoint - Figma's stock has experienced a significant decline following its IPO, primarily due to broader tech market sell-offs and concerns regarding AI valuations and competition from Adobe, despite reporting strong earnings results [1][4][6]. Company Performance - Figma's third-quarter earnings report showed positive results, with revenue increasing by 38% to $274.2 million, surpassing estimates of $264 million. Adjusted net income rose from $9.9 million to $45.4 million, equating to $0.10 per share, exceeding the consensus estimate of $0.05 [5][6]. - The company provided solid guidance for the fourth quarter, projecting revenue growth of 35% to between $292 million and $294 million, along with expected adjusted operating income of $112 million to $117 million for the full year [8]. Market Context - The stock fell 28% in November, continuing a downward trend that began after its IPO, influenced by a general decline in tech stocks and fears of an AI bubble [2][4]. - The sell-off was exacerbated by Adobe's acquisition of Semrush, indicating Adobe's proactive approach to growth, which may indirectly impact Figma's competitive position [7]. Investment Outlook - Figma's current market capitalization has dropped below the $20 billion acquisition offer from Adobe in 2022, and its share price is slightly above the $33 IPO price, making it appear well-priced [9]. - With ongoing business momentum and the introduction of new AI-powered products like Figma Make, the company is positioned as an attractive investment opportunity [8][9].
Why Figma Stock Fell 28% in November