Figma (NYSE:FIG) stock made a splash when it went public late last month, with shares tripling on their first day of trading. But the early euphoria has faded – the stock now trades about 31% below its day-one close.
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Even so, the IPO was a significant milestone for the design platform, which counts roughly 13 million active users and has delivered steady revenue growth over the past two years, including a 41% jump in Q2 2025.
Yet, impressive growth alone isn’t enough to sway everyone. Top investor Michael Wiggins De Oliveira, who is among the top 3% of TipRanks’ stock pros, warns that jumping on the bandwagon now could be a costly mistake.
“I don’t see a clear enough inflection for Figma to maintain its pricing power or growth profile over the next few quarters to justify its current multiple,” Wiggins De Oliveira explains. While the investor acknowledges the “impressive userbase” and rapid revenue growth, he points to concerns that weaken the risk-reward profile.
Chief among them is the growing narrative that AI could erode Figma’s competitive moat. With technological disruption moving at breakneck speed, Wiggins De Oliveira questions whether the company can sustain its pace of year-over-year growth. Competitors could introduce advances that replicate core features of Figma’s platform, undermining its uniqueness.
“The company is up against a challenging narrative that AI could disrupt much of its underlying offering,” the investor adds, projecting that revenue growth could slow to 30%–35% annually.
Beyond growth concerns, Wiggins De Oliveira also casts doubt on the quality of Figma’s cash flow profile. While the company posted a notable swing to nearly $100 million in free cash flow in Q1 2025, the investor cautions that the figure may have been flattered by one-off factors tied to its IPO filing. Stripping those out, he estimates sustainable annual free cash flow closer to $250 million at best – a figure that, when set against its market cap, leaves FIG trading at an expensive ~160x forward free cash flow.
“Outperformance comes from patience and picking your spots – and for me, FIG just doesn’t make the cut,” concludes Wiggins De Oliveira, who rates FIG a Sell. (To watch Michael Wiggins De Oliveira’s track record, click here)
For now, FIG is too new to have analyst ratings, but with its IPO, early volatility, and high-profile debate, Wall Street attention is likely to grow in the months ahead. (See FIG stock analysis)
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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.