Figma (FIG) has caught plenty of investor attention recently, with shares trending lower after a series of subdued sessions. While there was no specific event triggering the latest move, the ongoing sell-off has some investors wondering whether the current valuation is justified or if something bigger is at play with the company's fundamentals.
Looking back over the past month, Figma’s stock has declined about 35%. The year has been even tougher, with shares down over 54% since January. Despite respectable annual revenue growth of 18%, profitability has moved in the opposite direction this year, which may be raising fresh concerns. Taken together, the lack of clear positive catalysts and negative momentum suggest that market sentiment has shifted, and not in Figma’s favor for now.
So with the shares having pulled back so sharply this year, is the market offering a rare entry point, or are investors right to be wary that future growth is already priced in?
Most Popular Narrative: 19.2% Undervalued
The leading narrative sees Figma as significantly undervalued, suggesting the market is missing key growth or profitability factors that support a higher fair value for the stock.
“AI-driven product expansion: Buzz, Make, Sites, Slides, and Draw launched with AI features and deep integration. Enterprise adoption: 13M+ active users and approximately 95% of Fortune 500 companies use Figma.”
Curious what is fueling this bullish view? There is a bold financial roadmap at play, driven by eye-opening profit assumptions and aggressive growth projections. Want to uncover the exact numbers guiding this undervalued thesis? The details behind the next leap in valuation might surprise you.
Result: Fair Value of $65.70 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.However, a slower revenue pace or rapid advances by rivals with strong AI offerings could quickly challenge the view that Figma remains undervalued.
Find out about the key risks to this Figma narrative.Another View: Market-Based Comparison Tells a Different Story
Looking through a different lens, a market valuation method highlights that Figma’s shares are priced well above the typical range for its industry. This raises the question of whether the market is overlooking risk or placing a strong bet on future dominance.
See what the numbers say about this price — find out in our valuation breakdown.Build Your Own Figma Narrative
If you see things differently or want to dig into the numbers firsthand, you can shape your own perspective in just a few minutes. Do it your way
A great starting point for your Figma research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Valuation is complex, but we're here to simplify it.
Discover if Figma might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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