Figma (FIG) Stock Could Be 47% Overvalued As Control Layer Hopes Grow

Figma stock has rebounded in the short term, yet after a year to date decline of 35.2% the latest valuation work still points to a premium price, with both the Discounted Cash Flow (DCF) intrinsic value estimate and market multiples flagging the shares as overvalued rather than clearly cheap.

• Year to date, Figma is down 35.2%, which means the recent rally has come off a weak base rather than from previous highs.
• The company is pitching itself as the control layer for modern product design, which can support growth expectations, while analysts have highlighted gross margin pressure and rising competition as potential constraints on how much investors may be willing to pay for that story.
• Figma scores just 1 out of 6 on the broader valuation checks, which leans more toward expensive than a clear bargain.

The issue now is whether the premium signaled by both the intrinsic value estimate and the market multiples is justified by Figma's role in product design or leaves limited room for error at the current price.

Figma delivered 0.0% returns over the last year. See how this stacks up to the rest of the Software industry.

Has Figma Run Too Far on Cash Flow?

The Discounted Cash Flow (DCF) model used here looks at the cash Figma is expected to generate for shareholders over time and discounts it back to today. Based on the latest numbers, Figma produced about $235.1 million in free cash flow over the last twelve months, and the model assumes these cash flows continue to grow rather than shrink.

Those projections translate into an estimated intrinsic value of about $16.55 per share. Compared with the current share price, that implies Figma is about 47.3% overvalued on this cash flow view. Goldman Sachs maintaining a Buy rating and a $30 target after Figma’s recent investor session is one factor that helps explain why the market is still comfortable paying well above the level suggested by the DCF work.

On this Discounted Cash Flow view, Figma stock appears clearly overvalued at today’s price.

Our Discounted Cash Flow (DCF) analysis suggests Figma may be overvalued by 47.3%. Discover 49 high quality undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Figma.

Is Figma Getting Expensive on Sales?

P/S is often useful for a company like Figma that is still building its earnings profile but already generates meaningful revenue.

Figma currently trades on a P/S ratio of about 11.1x. This sits well above the broader Software industry average P/S of 3.6x and is also higher than the peer average of 16.8x suggested as a comparison group. The tailored fair P/S ratio for Figma that accounts for its growth profile, margins, size and risk comes out at 8.7x.

That means the stock is trading at a premium to what this model flags as a more balanced P/S level. The gap indicates that investors are paying a higher price for each dollar of Figma’s sales than both the industry norm and the model’s fair ratio would imply.

On the P/S multiple, Figma stock currently appears overvalued relative to the revenue level the company generates today.

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

The Figma Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Figma pick up where the valuation work stops. They explain what would need to happen to Figma's growth, margins and earnings for the stock to be worth materially more or less than today's price, and sit on Simply Wall St's Community page. Where a ratio or model produces a single number, Narratives unpack the future behind that number so you can track whether it stays on course or drifts away.

The Figma community is split between those who see a long runway from its product footprint and AI tools and those who worry the stock already bakes in a lot of that promise.

Bull case: 20% undervalued

"Rapid adoption of AI native workflows through Figma Make, MCP server and governance grade capabilities is expanding use cases beyond core designers to PMs, researchers and developers, which should sustain high net dollar retention and accelerate seat and product expansion driven revenue growth…"

Read the full Bull Case to see why Figma could be undervalued

Bear case: 30% overvalued

"Growth slows faster than expected as competitors like Adobe, Canva, and Webflow match Figma’s AI features and push hard into its customer base…"

Read the full Bear Case to see why Figma could be overvalued

Do you think there's more to the story for Figma? Head over to our Community to see what others are saying!

The Bottom Line

For Figma, both the Discounted Cash Flow (DCF) intrinsic value estimate and the sales multiple work point in the same direction. The stock screens as overvalued on cash flows and on P/S, while the broader valuation checks also sit at the weaker end. That does not rule out strong long term outcomes, but it does mean the current price already asks a lot of the business. The crux from here is whether Figma can sustain the growth and margin profile that bulls expect before competition or cost pressure starts to bite into that premium.

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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