Analysis of Figma's 83% Stock Plunge
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 05 2026
0mins
Should l Buy FIG?
Source: Fool
- Stock Plunge Reasons: Figma's stock has plummeted 83% in just six months, dropping from $142.92 on August 1 to around $24, indicating severe market concerns about its growth prospects, despite reporting $274 million in revenue for the last quarter, a 38% year-over-year increase.
- Market Overreaction: While the market appears pessimistic about Figma's future, the company has posted operating profits in two of the last three quarters, suggesting that its business is not as dire as perceived, and it is continuing to grow steadily.
- AI Impact Analysis: The rise of artificial intelligence and chatbots poses a risk to the demand for Figma's design software, leading investors to worry that its growth opportunities may diminish, even though the software also aids users in building applications.
- Investment Opportunity Assessment: Despite the current low stock price, Figma's guidance for a 35% growth rate in the fourth quarter indicates ongoing growth potential, making it a potentially undervalued investment opportunity amid market panic.
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Analyst Views on FIG
Wall Street analysts forecast FIG stock price to rise
9 Analyst Rating
3 Buy
6 Hold
0 Sell
Moderate Buy
Current: 22.020
Low
38.00
Averages
53.13
High
70.00
Current: 22.020
Low
38.00
Averages
53.13
High
70.00
About FIG
Figma, Inc. designs and develops platforms for people who build digital products together. The Company helps cross-functional teams align and build software more efficiently and ensure the advanced access and controls that large organizations require. Its products include Figma Design, Dev Mode, Figma Sites, Figma Make, Figma Draw, Figma Buzz, FigJam and Figma Slides. Figma Sites is a product that lets clients design a Website and directly publish it to the Web, with a custom URL. Figma Make is an AI-powered tool that turns a prompt into a fully functional prototype. Figma Buzz is a product for easily creating marketing assets (like social media assets and digital ads) at a scale that is consistent with brand or visual identity. Figma Draw provides a space for finer vector editing required when drawing detailed iconography and product illustrations. Figma Design combines powerful features with a collaborative workspace to help teams design and build better products together.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Increased Market Volatility: Last week, stocks in software, real estate, financial services, and logistics faced selling pressure due to concerns over AI-related disruptions, with the Nasdaq Composite falling 0.2% and a weekly loss of 2.1%, indicating market sensitivity to AI impacts.
- Consumer Spending Data Focus: This week's highlight will be the Personal Consumption Expenditures (PCE) report on Friday, which will provide insights into consumer spending in December and inflation trends, especially following last week's unexpected slowdown in the Consumer Price Index (CPI).
- Corporate Earnings in Spotlight: Walmart (WMT) is set to release its fourth-quarter earnings on Thursday, marking the first report under new CEO John Furner, making it a key indicator of consumer spending that the market is eagerly anticipating.
- Ongoing AI Impact: As AI tools' potential effects intensify across various sectors, software stocks like Salesforce (CRM) and ServiceNow (NOW) have seen significant declines, reflecting the market's heightened vigilance regarding AI disruptions, necessitating close monitoring of future industry developments.
See More
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- Figma Stock Decline: Figma's shares fell 6% on Wednesday, now down 84% from their August peak, despite a net dollar retention rate of 131% indicating increased spending from major clients; however, market caution ahead of its upcoming earnings report suggests growth concerns may undermine investor confidence.
- Robinhood Earnings Miss: Robinhood's stock dropped 8.78% after reporting a 27% revenue increase to $1.28 billion in Q4, which fell short of analyst expectations, and concerns over capital expenditure guidance highlight a slowdown in cryptocurrency and stock trading activities.
- Shopify Performance Disappointment: Shopify reported a 31% revenue increase in Q4 and a 30% rise for the full year, yet its stock still declined by 6%, with analysts lowering price targets due to valuation compression affecting market sentiment despite strong performance metrics.
- Cathie Wood's Buying Spree: Amid widespread market sell-offs, Cathie Wood of Ark Invest increased her holdings in Figma, Robinhood, and Shopify on Wednesday, indicating confidence in these undervalued growth stocks and potentially signaling future rebound opportunities.
See More
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- Increased Stake in Robinhood: Ark Invest significantly raised its position in Robinhood by acquiring over 433,000 shares across multiple ETFs on Wednesday, despite the stock's 8% decline following a 38% drop in crypto revenue, indicating a long-term confidence in the company.
- Significant Trade Value: The Robinhood trade was estimated to be worth $33.9 million based on the stock's closing price of $78.07, reflecting Ark's proactive positioning in the face of market volatility and potential rebound opportunities.
- Figma Shares Acquisition: On the same day, Ark also purchased shares of Figma Inc., further diversifying its investment portfolio and demonstrating interest in the design software market's growth potential.
- Airbnb Shares Sale: Ark Invest simultaneously sold a substantial amount of Airbnb stock, indicating a strategic adjustment in its market approach, likely aimed at optimizing its portfolio in response to changing market conditions.
See More
Figma Inc (FIG.US) Officer Plans to Sell $4.55 Million in Common Stock via Form 144
Stock Sale Announcement: Officer Christopher Rasmussen intends to sell 205,440 shares of Figma Inc. common stock on February 10, with a total market value of approximately $4.55 million.
Reduction in Shareholding: Rasmussen has reduced his shareholding in Figma Inc. by 619,420 shares since November 12, 2025, with a total value of around $22.17 million.
See More
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- Market Rebound Signal: Figma Inc (NYSE:FIG) shares surged 12.34% to $24.86 on Tuesday, indicating a potential recovery in the software sector after recent AI-driven volatility, as market sentiment improves.
- Analyst Optimism: JPMorgan's Dubravko Lakos-Bujas noted that the sharp selloff in software stocks was excessive, believing that high-quality software companies will benefit from a market rebound, especially given solid fundamentals that tilt the risk-reward balance positively.
- Strong Earnings Boost: Datadog Inc (NASDAQ:DDOG) reported strong fourth-quarter earnings of $0.59 per share, significantly exceeding expectations of $0.39, and projected fiscal 2026 earnings between $2.08 and $2.16 per share, injecting positive momentum into the software industry.
- Weak Dollar Support: Morgan Stanley analyst Katy Huberty highlighted that a weaker dollar could provide tailwinds for mega-cap tech, further supporting the software sector's recovery, indicating that the current valuation dislocation is sentiment-driven rather than fundamentally based.
See More
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- Stock Rebound: Figma shares rose by 13.1%, recovering from a severe sell-off in the software sector, indicating market confidence in the company's future despite a previous drop of over 85%.
- Market Response: JPMorgan noted that the decline in software stocks presents an investment opportunity rather than a warning, encouraging investors to buy high-quality software stocks, which has led to Figma's stock rising for the third consecutive day, reflecting optimism in the software industry.
- Earnings Expectations: Figma is set to report its fourth-quarter earnings on February 18, with analysts expecting revenue of $293.2 million and adjusted earnings per share of $0.06, prompting investors to closely analyze the report for insights on AI competition's impact on future growth.
- Industry Outlook: While AI tools may pose a threat to design software, there is currently no evidence that Figma is being disrupted by new products, and the company's strong earnings performance has bolstered investor confidence, potentially attracting more capital inflows.
See More
