Figma (FIG): Gauging Valuation After Recent 25% Share Price Drop and Fading Growth Momentum

Figma (NYSE:FIG) may not have made headlines for a significant acquisition or AI-powered transformation this week, but the stock's recent moves have started raising questions among investors. Over the past month, FIG shares have fallen by nearly 25%, erasing much of their late winter enthusiasm. With many trying to make sense of this drop, the debate has shifted toward whether the change signals a market adjustment or something deeper about Figma’s prospects.

This pullback comes after a year where Figma’s revenue grew at a healthy 18%, even as its net income slid by 24%. Momentum has clearly faded in recent weeks, as shown by both the one-week and month-long declines. There is a sense of uncertainty among investors as last year's growth narrative gives way to concerns over valuation and underlying profitability.

After such a sharp month-long drop, the key question now is whether this pullback offers a real chance to buy in or whether the risks are finally catching up with future expectations baked into Figma’s price.

Most Popular Narrative: 19.5% Undervalued

According to TickerTickle's widely followed narrative, Figma shares appear to be trading at an attractive discount to fair value, with plenty of attention on its evolving platform strategy and profit outlook.

Everything clicks. AI tools become a moat, not a feature. Figma becomes the default creative platform for product, marketing, and web teams, pulling users from Canva, Google Slides, and Webflow. The ecosystem effect snowballs. Once a company adopts multiple Figma products, leaving becomes too disruptive. Enterprise adoption deepens, brand recognition extends beyond designers, and the company starts to influence the broader creative software market the way Adobe did in the 2000s. Growth stays above expectations, margins expand, and the market keeps pricing it like a category-defining leader.

Curious about the bold math behind this bullish valuation? The real secret is in ambitious growth assumptions, future profit multiples and hefty margin expansion. These are projections you won't see in the headlines. Want to know which aggressive financial moves underpin this creative platform's price target? There are surprising numbers and high-stakes calculations hidden in the narrative. Dive in to see what sets this vision apart.

Result: Fair Value of $65.7 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slower-than-hoped growth or aggressive moves from major competitors could quickly challenge even the most optimistic view of Figma’s long-term market edge.

Find out about the key risks to this Figma narrative.

Another View: Price Tag Tells a Different Story

While the bullish case leans on future profits and platform potential, a different lens—looking at how the market is valuing Figma compared to sales in its industry—suggests that the stock is expensive. Could excitement be getting ahead of reality, or is the market overlooking hidden strengths?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Figma to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Figma Narrative

If you see the story unfolding differently or want to dig into the numbers yourself, it's easy to craft your own take in just minutes. Do it your way.

A great starting point for your Figma research is our analysis highlighting 2 key rewards and 4 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.

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