Core Viewpoint - Figma, once a hot stock, has seen a significant decline of over 75% from its all-time high, but it may be one of the most underestimated stocks in the market for 2026 [1] Group 1: Current Market Conditions - The software market is facing tough times, with a general sentiment that AI may render many software applications obsolete [3] - This sentiment mirrors the internet boom of the late 1990s, where perceptions often outpaced the actual impact of new technologies [3] Group 2: Figma's Unique Position - Figma offers robust capabilities for creating digital products and interfaces, including real-time collaboration and integration with AI applications like OpenAI's ChatGPT [4] - The company is characterized as a new-age software firm, suggesting resilience against the current market downturn [4] Group 3: Financial Performance - Figma is nearing $1 billion in trailing-12-month revenue, with projections of nearly $1.3 billion this year and over $1.5 billion next year [5] - The company has a high revenue retention rate of 131%, indicating that users are increasing their spending over time [5] Group 4: Investment Opportunities - The decline in Figma's stock price has created attractive investment opportunities, with a price-to-sales ratio of 14, which is favorable for a company expected to grow revenue by 50% over the next two years [6] - Figma is already profitable, converting over 25% of its sales into free cash flow, enhancing its investment appeal [6] Group 5: Future Outlook - If Figma meets Wall Street's growth estimates over the next two years, it could outperform the broader market despite current fears surrounding AI disruption [8] - A potential easing of fears regarding AI could lead to a rise in Figma's valuation, increasing the stock's upside potential [8]
The Enterprise Software Stock Wall Street Is Underestimating in 2026