Shares of design platform Figma (FIG) tanked by 27.4% on Monday as investors sold shares to lock in profits after its huge market debut. In fact, the company skyrocketed by 250% on Thursday, climbing from its $33 IPO price to close at $115.50, giving it a market value of about $67.6 billion. The rally continued Friday, with shares rising to $122, but by Monday, the price closed at $88.60 per share.
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Nevertheless, even with the pullback, some analysts believe that Figma’s long-term prospects remain strong. Indeed, Michael Ashley Schulman, the Chief Investment Officer at Running Point Capital, said that although the “euphoria” around the IPO is fading as early buyers take profits, “the excitement for Figma’s business is not over.” This is because Figma’s cloud-based design tools are widely used by major companies like Alphabet (GOOGL), Microsoft (MSFT), Netflix (NFLX), and Uber (UBER).
In addition, Figma’s CEO and co-founder, Dylan Field, still controls about 74% of the company’s voting power through Class B shares. Even after selling 2.35 million shares during the IPO, his remaining 54.2 million shares are worth about $5 billion. This means that Field is still very confident in his company’s future. It is also worth noting that Figma’s rise shows just how far it has come since Adobe (ADBE) walked away from a $20 billion acquisition deal in 2023 due to regulatory hurdles. Indeed, as Schulman noted, Figma’s current $46 billion market value makes Adobe’s failed bid “a distant memory.”
Is FIG Stock a Good Buy?
Overall, analysts see Figma as a high-growth SaaS firm with strong gross margins and retention rates. Although some are cautious about its valuation, most see its product stickiness as a key advantage in its market. As a result, investors expect it to continue growing.