Figma's Stock Decline Presents Long-Term Opportunities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 27 2026
0mins
Should l Buy FIG?
Source: Fool
- Revenue Growth Potential: Figma's trailing twelve-month revenue is nearing $1 billion, with expectations to rise to nearly $1.3 billion this year and over $1.5 billion next year, indicating strong market demand and growth potential.
- High User Retention: The company boasts a revenue retention rate of 131%, suggesting that users continue to increase their spending over time, reflecting high product stickiness and customer satisfaction.
- Attractive Valuation: Despite the stock's decline, Figma's price-to-sales ratio has slipped to 14, making it an appealing investment given the potential for 50% revenue growth over the next two years.
- Market Sentiment Shift: While AI technology has spooked investors away from software stocks, Figma's ongoing growth and potential shifts in market sentiment could lead to a rebound in its stock price, offering significant returns for investors.
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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: 20.240
Low
38.00
Averages
53.13
High
70.00
Current: 20.240
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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- Q1 Performance Exceeds Expectations: Figma reported Q1 revenue of $333.4 million, exceeding analyst estimates of $316 million, demonstrating the company's competitive strength and strong user demand for its products.
- Optimistic Q2 Outlook: The company forecasts Q2 revenue between $348 million and $350 million, also above analysts' estimate of $329 million, reflecting its ability to continue attracting users to its AI design software.
- Strong User Willingness to Pay: Figma's CFO noted that over 75% of higher-tier customers opted to continue purchasing additional credits after exceeding limits on AI features, showcasing customer recognition and reliance on the company's offerings, further solidifying Figma's market position.
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- Improved Profitability: Adjusted earnings per share jumped from $0.03 to $0.10, exceeding analyst expectations of $0.06, reflecting effective strategies in cost control and revenue growth, which bolstered investor confidence.
- Optimistic Future Outlook: Management set revenue guidance targets for the next quarter and full year above current analyst projections, demonstrating Figma's confidence in future growth, potentially attracting more investor interest.
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- AI Credit Limit Implementation: Since the implementation of AI credit limits on March 18, over 75% of org and enterprise users exceeding their limits continued to use credits, indicating strong user stickiness, with over 95% remaining active on the platform.
- Increased Customer Spending: Pro teams that purchased AI credit add-ons had more seats per team and an average 3X ARR spend compared to teams without add-ons, demonstrating the recognized value of AI functionalities among users.
- Analyst Rating Changes: RBC maintained its Sector Perform rating while lowering its price target from $31 to $28, and Piper Sandler reiterated its Overweight rating but reduced its target from $35 to $30, reflecting a cautiously optimistic market outlook on Figma's future growth.
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- Improved Net Dollar Retention: The net dollar retention rate improved to 139%, the highest level in over two years, reflecting successful customer retention and expansion, which further solidifies Figma's position in the enterprise market.
- AI Monetization Strategy: CFO Praveer Melwani stated that Q2 will mark Figma's first full quarter of AI credit monetization, with early trends already exceeding expectations, attracting investor interest and signaling potential revenue growth in the future.
- Positive Market Reaction: Despite RBC Capital Markets lowering Figma's price target to $28, investor optimism regarding its growing role in enterprise AI workflows remains strong, as the stock shows signs of recovery after significant declines, with technical indicators also beginning to improve.
See More
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- Revenue Forecast Increase: Figma raised its 2026 revenue forecast to $1.42 billion to $1.43 billion, surpassing analysts' expectations of $1.37 billion, indicating strong growth potential amid surging demand for AI software.
- Q1 Performance Exceeds Expectations: Figma reported Q1 revenue of $333.4 million, exceeding analyst estimates of $316 million, demonstrating the company's competitive strength and strong user demand for its products.
- Optimistic Q2 Outlook: The company forecasts Q2 revenue between $348 million and $350 million, also above analysts' estimate of $329 million, reflecting its ability to continue attracting users to its AI design software.
- Strong User Willingness to Pay: Figma's CFO noted that over 75% of higher-tier customers opted to continue purchasing additional credits after exceeding limits on AI features, showcasing customer recognition and reliance on the company's offerings, further solidifying Figma's market position.
See More
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- Strong IPO Performance: Cerebras Systems saw its shares surge nearly 70% during its IPO, elevating its market cap to approximately $95 billion, marking the largest IPO of the year and the biggest for a U.S. tech company since Uber in 2019.
- Market Environment Challenges: Despite Cerebras' success providing hope for the tech IPO market, the impending listings of high-valued AI companies like SpaceX and OpenAI make it difficult for other firms to capture investor attention, leading to diminished interest in non-AI companies.
- Industry Dynamics Shift: The IPO of Cerebras offers investors a chance to engage in the AI boom, particularly against the backdrop of a nearly dormant tech IPO market over the past four years, indicating a resurgence in demand for pure-play tech stocks.
- Future Outlook: With the upcoming IPOs of companies like SpaceX, Cerebras' success may encourage more high-value startups to consider going public, although the market still requires more data points to confirm investor receptivity.
See More
Figma's Q1 Earnings Exceed Expectations, Stock Surges
- Significant Revenue Growth: Figma's Q1 revenue surged 46% year-over-year to $333 million, surpassing market expectations of $316 million, indicating strong demand for its design tools and solidifying its market position.
- Improved Profitability: Adjusted earnings per share jumped from $0.03 to $0.10, exceeding analyst expectations of $0.06, reflecting effective strategies in cost control and revenue growth, which bolstered investor confidence.
- Optimistic Future Outlook: Management set revenue guidance targets for the next quarter and full year above current analyst projections, demonstrating Figma's confidence in future growth, potentially attracting more investor interest.
- Strategic Positioning of AI Tools: CEO Dylan Field emphasized that AI serves as a complement rather than a replacement for design tools, indicating Figma's commitment to balancing human creativity with AI, ensuring efficiency and cost management for customers.
See More
Microsoft Shares Rise as ServiceNow Partners with Experian
- Microsoft Shares Rise: Microsoft's stock rose nearly 4% following Bill Ackman's disclosure of accumulating shares, as he finds the company's valuation to be 'highly compelling' after its second-quarter earnings report.
- ServiceNow Partnership: ServiceNow's stock increased nearly 5% after announcing a multiyear partnership with Experian to develop autonomous AI agents, which is expected to enhance their competitive edge in the AI market.
- Ford Stock Decline: Ford's shares fell about 7% after a previous surge of over 20%, with analysts noting that recent gains were driven more by enthusiasm around battery storage ambitions than by solid fundamentals.
- Figma Earnings Beat: Figma's stock surged nearly 9% after reporting first-quarter earnings of 10 cents per share on revenues of $333 million, exceeding analyst expectations of 6 cents per share, indicating strong market demand.
See More
Figma Reports Strong Q1 Earnings Beat with AI Monetization Success
- Earnings Beat: Figma's Q1 report revealed its largest earnings beat since its IPO, reflecting successful AI monetization efforts, with projected 2026 revenue between $1.422 billion and $1.428 billion.
- AI Credit Limit Implementation: Since the implementation of AI credit limits on March 18, over 75% of org and enterprise users exceeding their limits continued to use credits, indicating strong user stickiness, with over 95% remaining active on the platform.
- Increased Customer Spending: Pro teams that purchased AI credit add-ons had more seats per team and an average 3X ARR spend compared to teams without add-ons, demonstrating the recognized value of AI functionalities among users.
- Analyst Rating Changes: RBC maintained its Sector Perform rating while lowering its price target from $31 to $28, and Piper Sandler reiterated its Overweight rating but reduced its target from $35 to $30, reflecting a cautiously optimistic market outlook on Figma's future growth.
See More
Figma Posts Strong Q1 Results, Stock Surges
- Strong Revenue Growth: Figma reported Q1 revenue of $333 million, a 46% year-over-year increase that surpassed analyst expectations of $316 million, indicating robust growth driven by enterprise seat expansion and adoption of AI tools, thereby boosting market confidence in its future prospects.
- Improved Net Dollar Retention: The net dollar retention rate improved to 139%, the highest level in over two years, reflecting successful customer retention and expansion, which further solidifies Figma's position in the enterprise market.
- AI Monetization Strategy: CFO Praveer Melwani stated that Q2 will mark Figma's first full quarter of AI credit monetization, with early trends already exceeding expectations, attracting investor interest and signaling potential revenue growth in the future.
- Positive Market Reaction: Despite RBC Capital Markets lowering Figma's price target to $28, investor optimism regarding its growing role in enterprise AI workflows remains strong, as the stock shows signs of recovery after significant declines, with technical indicators also beginning to improve.
See More
