Core Viewpoint - Figma's stock has experienced a significant decline due to broader concerns in the software sector, particularly fears surrounding AI disruption in software applications [1][2]. Group 1: Stock Performance - Figma's shares fell 31% last month, reflecting a broader trend affecting software-as-a-service (SaaS) stocks [2]. - The stock has decreased by more than a third from its IPO price six months ago and is down 85% from its peak shortly after the IPO [7]. Group 2: Market Context - The decline in Figma's stock was exacerbated by earnings reports from major SaaS companies like Microsoft, ServiceNow, and SAP, which raised concerns about future guidance and capital expenditures [5]. - Adobe, a competitor of Figma, also saw a 16% drop in its stock, indicating that the sell-off is more about sector-wide pressures rather than company-specific issues [6]. Group 3: Analyst Sentiment - Despite the stock's decline, many Wall Street analysts maintain a bullish outlook on Figma, with Wells Fargo upgrading the stock to overweight due to its leadership in product design and efficient growth track record [4]. - Figma currently trades at 12 times sales, which is still considered high compared to historical valuations for software stocks [7]. Group 4: Future Outlook - Figma is expected to report fourth-quarter earnings on February 18, with analysts projecting revenue of $293.2 million and adjusted earnings per share of $0.06 [8]. - The company is viewed as oversold, with a healthy business model that is growing rapidly and historically profitable [8].
Why Figma Stock Lost 31% in January