Figma Plunges 30% in 3 Months: Should You Hold or Fold the Stock?

Core Insights - Figma (FIG) shares have declined by 29.8% over the past three months, underperforming the Zacks Internet - Software industry's decline of 12.5% [1][4] - Despite the decline, FIG stock is trading at a premium with a forward 12-month Price/Sales ratio of 12.85X compared to the Computer and Technology sector's 4.92X [4] - Figma's non-GAAP operating profit decreased by 28.9% year over year to $34.02 million, with the operating profit margin contracting from 24% to 12% [6] Company Performance - Figma's customer base has grown to 540,000 paid customers, driven by new product launches and strong enterprise adoption [4][11] - The company added over 90,000 paid teams in just two quarters, indicating robust growth despite competitive pressures [11][13] - Figma's net dollar retention rate for customers spending $10,000 or more annually was 131% in the third quarter of 2025 [11] Competitive Landscape - Figma faces significant competition from established players like Adobe, Microsoft, and Atlassian, which are enhancing their offerings with AI features [7][9] - Adobe's Firefly and Microsoft Copilot are contributing to their growth, impacting Figma's market share [7] - Atlassian is integrating generative AI features into its collaboration software, further intensifying competition [9] Product Development - Figma launched four new products in early 2025, including Figma Make, Figma Draw, Figma Sites, and Figma Buzz, effectively doubling its product offerings [13] - Approximately 30% of customers spending $100,000 or more in annual recurring revenue were using Figma Make weekly by the end of September [14] - The introduction of the Dev Mode MCP server aims to enhance developer workflows by integrating Figma Design context into various platforms [14] Investment Outlook - Given the stock's slump, premium valuation, margin pressures, and rising competition, the near-term upside for Figma remains uncertain [15] - However, strong customer growth and product adoption indicate resilience, leading to a recommendation to hold the stock for now [15]