There tends to be plenty of excitement around IPOs, and the hullabaloo around Figma (NYSE:FIG) earlier this summer was no exception. The platform for design sharing started its publicly-traded journey white hot, surging skyward by some 250% on its first day on the market. Since then, however, it has been mostly rolling downhill.
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This drooping share price has continued even after the company released its Q2 2025 results last week, which reflected strong revenue growth of 41% — with more of the same expected through the end of the year. Still, this wasn’t enough to stem the bloodshed, as FIG’s forward growth figures fell short of elevated buyside expectations.
At a certain point, the thinking goes, the early buzz will wear off and the company will be judged on its fundamental metrics. Is that what’s happening with one of the newest publicly-traded companies on the market?
Not exactly, explains top investor James Brumley.
“The market doesn’t really know how to price — or even what to do with — newly created stocks,” asserts the 5-star investor, who’s ranked among the top 1% of stock pros on TipRanks.
Brumley cites examples including Meta and Snap, which took some time to stabilize following some initial volatility. That does make evaluating Figma a bit of a puzzle, though.
“It could be months, if not years, before this ticker actually reflects the underlying company’s prospects,” adds Brumley.
On that note, the investor is not thrilled by the company’s “outrageous” valuation of 30x Price-to-Sales, which is significantly higher than the softer sector’s average of 10x. The investor is more troubled by Figma’s moat, however, as he has a hard time understanding how the company can protect itself from potential competitors.
Brumley points out that there is no legal way for Figma to prevent deep-pocketed rivals from trying to copy its money-making business model. The investor notes that companies such as Adobe (which previously tried to purchase FIG) and Microsoft could conceivably create a similar offering.
In other words, Brumley isn’t convinced that FIG is a good one to bank on.
“You’re not investing in a growth business with proven staying power — at least not yet,” concludes Brumley. (To watch James Brumley’s track record, click here)
Over on Wall Street, most analysts seem content to sit tight for the time being. With 7 Holds far outpacing 2 Buys, FIG carries a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $67.57 has an upside approaching 30%. (See FIG stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.