Figma’s 250% IPO Pop Stabs Them In The Back After Flunking Wall Street’s First Exam

After debuting with a 250% IPO explosion in late July, Figma is getting a double dose of reality… and not the fun kind like on Love Island that your girlfriend forces you to watch with her. Shares are down 20% after the design software vendor reported earnings for the first time, and while the numbers weren’t catastrophic, when you’re trading at a Palantir-level valuation (minus the whole “we sell government black ops contracts and spooky AI surveillance to NATO” thing), you’re basically f*cked. And that’s exactly what happened here.

The financials were actually pretty solid on the surface. Revenue grew 41% year over year to $249.6 million, net income came in at $28.2 million, and retention stayed strong at 129%. Those are legit numbers. But investors didn’t sign up for “legit.” They signed up for “holy sh*t, this company is reinventing money itself.” It’s like lining up for Apple’s big “one more thing” reveal and Tim Cook just rolls out another Vision Pro update with slightly better straps (never fails).

Since its unbelievable debut, the stock has lost more than half its value, and that should tell you something. Yes, $27 billion is still remarkable for what is essentially a highly polished Google Doc for designers to argue about fonts in real time, but that’s exactly the point… remarkable only goes so far. People in tech love Figma (to the point where entire startups are built inside of it), but Wall Street doesn’t trade on vibes. It trades on durable growth, defensible moats, and, ideally, contracts so sticky they survive recessions. For instance, Palantir may have an equally controversial valuation, but at least it can point to billion-dollar government deals as ballast. Figma can’t do that yet.

(Source: Bloomberg)

CEO Dylan Field leaned into long-term vision on the call, pitching AI as the next big unlock for design. His argument was that AI will “raise the ceiling” by making design more accessible to non-designers while empowering professionals to push boundaries further. That’s an admirable vision, but here’s the catch: every company in 2024 (and now 2025) is pitching AI as their salvation. Meaning, saying “we’re building AI features” doesn’t differentiate you anymore… it just lumps you in with a long line of firms trying to bolt ChatGPT onto their products and call it innovation. Hence the stock dump.

Analysts weren’t buying the vision either. Piper Sandler literally called the report “a non-event”. Morgan Stanley and BofA went a step further and cut their price targets. In the end, Wall Street’s verdict is: Figma’s fine, but fine doesn’t justify an out of this world valuation. With all that said, Figma is still one of the fastest-growing software companies out there. They’re guiding for 33% revenue growth next quarter and over a billion in sales this year. So again, if the stock had risen say 50% instead of 250% on it’s debut, maybe we’re talking about a nice little stock bump instead of collapse. As Gary Vee loves to remind us (several times a day), context always matters.

At the time of publishing this article, Stocks.News holds positions in Apple and Google as mentioned in the article.