Figma's Stock Plummets 75% Post-IPO; AI Investments Become Key Focus
Written by Emily J. Thompson, Senior Investment Analyst
Source: Fool
- Poor IPO Performance: Figma went public on July 31, 2022, at $33 per share, peaking at $142.92 on its first day, but closed at $37.33 on January 9, reflecting a nearly 75% drop from its peak, indicating market disappointment with its performance.
- Dismal Market Valuation: With a current market cap of $18.5 billion, Figma's valuation is now below Adobe's previous $20 billion offer, highlighting concerns about its future growth potential despite significant improvements in its fundamentals.
- AI Investment Setbacks: Although Figma launched several new AI tools like Figma Make and Figma Buzz, the market reacted negatively to its AI investments, interpreting them as profit-dilutive, which has pressured its stock price and raised doubts about its strategic direction.
- Strong Growth Potential: Despite challenges, Figma reported a 38% year-over-year revenue increase to $274.2 million in Q3, with adjusted operating income of $34 million, indicating solid profitability and future growth prospects through AI investments.
Analyst Views on FIG
Wall Street analysts forecast FIG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for FIG is 60.86 USD with a low forecast of 52.00 USD and a high forecast of 70.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
9 Analyst Rating
2 Buy
7 Hold
0 Sell
Hold
Current: 37.270
Low
52.00
Averages
60.86
High
70.00
Current: 37.270
Low
52.00
Averages
60.86
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.
