Figma(US:FIG) ZACKS·2026-03-10 16:35Core Insights - Figma (FIG) stock is currently trading at a premium with a forward 12-month Price/Sales ratio of 9.46X, significantly higher than the Zacks Internet - Software industry's 4.03X, indicating overvaluation [1][8] - Despite a 75% decline in stock price since its IPO, Figma has underperformed compared to the Zacks Internet - Software industry, which has seen a 20.1% decline, while the broader tech sector has returned 8.3% [2] Financial Performance - Figma's non-GAAP operating profit decreased by 22% year over year to $44 million in Q4 2025, with a non-GAAP operating margin of 14%, down 1,200 basis points from the previous year [6][8] - Revenue growth has slowed throughout 2025, with year-over-year growth rates of 46%, 41%, 38%, and 40% in the first, second, third, and fourth quarters respectively [15] - The Zacks Consensus Estimate for Figma's 2026 revenues indicates a year-over-year growth rate of 29.8%, but the bottom line is expected to decline by 23% to 23 cents per share [16] Competitive Landscape - Figma faces significant competition from established players like Adobe, Microsoft, and Atlassian, which are enhancing their offerings with AI features that threaten Figma's market share [10][11] - Adobe's Firefly and Microsoft Copilot are particularly noted for driving growth and profitability, while Atlassian is also integrating generative AI into its collaboration software [10][12] Strategic Moves - Figma is focusing on long-term growth through acquisitions and feature enhancements, having increased acquisition activity in 2025, including the purchase of Weavy for over $200 million and Payload CMS [13][14] - These acquisitions have led to a substantial increase in Figma's goodwill, rising from $11.38 million at the end of 2024 to $101.4 million by the end of 2025 [15] Conclusion - Given the premium valuation, declining revenue growth, and increasing competitive pressures, it is suggested that investors consider selling Figma stock at this time [18]