Is Figma’s Stock Turbulence in 2025 Creating a New Opportunity for Investors?

Trying to figure out what to do with Figma stock? You are definitely not alone. The company’s shares have delivered a bumpy ride lately, and for investors, it is tempting to wonder if the recent swings reflect genuine shifts in growth potential or simply shifting perceptions of risk.

Let us set the scene. After closing at $77.30 in the latest session, Figma has seen its price dip about 2.7% over the past week, despite a single-day jump of 6.2%. That is the kind of turbulence that often hints something is brewing beneath the surface. At the same time, the gap between Figma’s stock price and the average analyst target stands at nearly 10%, suggesting analysts think there is still some upside on the table from here.

Figma’s fundamentals are a mixed bag. Revenues are up a healthy 26% year over year, but the company remains unprofitable for now and, by traditional valuation checks, may not be the bargain some bargain hunters are hoping for. In fact, if you look at our valuation score, where each of six key undervaluation checks adds a point, with a maximum of 6, Figma registers a 0. That means, by most traditional metrics, it fails each undervaluation test.

Still, numbers never tell the whole story on their own. To get to the heart of whether Figma stock is worth your consideration, let us walk through the major valuation approaches and see where things stand—before finally zooming out to a broader, and arguably better, way to judge value at the end.

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

Approach 1: Figma Cash Flows

A Discounted Cash Flow (DCF) model estimates what a company is worth by taking its expected future cash flows and discounting them back to today’s dollars. The concept is straightforward: how much would all of Figma’s future profits be worth if you could receive them now?

Currently, Figma generates Free Cash Flow (FCF) of $53.6 million per year. Analysts expect this to rise sharply, projecting Figma’s annual FCF to reach $119.4 million by 2035. Over the next decade, the company’s cash flow outlook is positive but moderates after the initial period of growth, with projections declining to around $119 million from a near-term $180 million in 2026.

When these future cash flows are discounted using industry-standard methods, the resulting estimated intrinsic value per share is about $3.91. Compared to the stock’s current price, the DCF model suggests Figma’s stock is approximately 1875% overvalued based on its fundamental cash flow outlook.

Result: OVERVALUED

Our DCF analysis suggests Figma may be overvalued by 1875.4%. Find undervalued stocks based on DCF analysis or create your own screener to find better value opportunities.

Approach 2: Figma Price vs Sales

The Price-to-Sales (P/S) ratio is often used to value technology companies, especially when they are growing quickly but have yet to reach steady profitability. For firms like Figma, where revenues are climbing but profits remain elusive, the P/S ratio gives investors a sense of how much they are paying for each dollar of revenue compared to industry peers and the broader market.

In general, a higher P/S ratio can be justified when a company is expected to grow faster or has much stronger margins and competitive advantages. However, if the P/S is significantly above the industry norm, it usually signals very high growth expectations or investors accepting more uncertainty and risk.

Figma’s current P/S comes in at 45.90x, which is considerably above the software industry average of 5.23x and also higher than the peer group average of 14.03x. The Simply Wall St “Fair Ratio” for Figma, which weighs factors like growth outlook, margins, and risks, would typically help indicate what a reasonable multiple ought to be. In this case, since the "Fair Ratio" is unavailable, all signs suggest that Figma is trading well above what fundamentals and sector norms would justify.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Figma Narrative

Narratives are a powerful way to connect your own view of a company’s future with real financial forecasts and fair value estimates. Instead of just looking at numbers, you tell your story—what you believe about Figma’s growth, profit margins, or competitive edge—and see how those beliefs translate into what the stock might actually be worth.

This approach is at the heart of the Simply Wall St platform, where millions of investors use Narratives to guide their decisions and check their thinking against the community’s. Narratives link a company’s story to its financial outlook and, crucially, update whenever new news breaks or earnings come out, keeping your view fresh and actionable without the noise.

By comparing your Narrative’s Fair Value with the current market price, you gain a smarter, more personal way to decide if it is time to buy or sell. For example, with Figma, one investor might see explosive growth ahead and estimate a fair value near the high end, while another sees risks and keeps their fair value low—clearly illustrating how Narratives reflect each person’s unique perspective.

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Upgrade Your Decision Making: Choose your Figma Narrative

Narratives are a powerful way to connect your own view of a company’s future with real financial forecasts and fair value estimates. Instead of just looking at numbers, you tell your story based on what you believe about Figma’s growth, profit margins, or competitive edge. This helps you see how those beliefs might influence the stock's value.

This approach is central to the Simply Wall St platform, where millions of investors use Narratives to guide their decisions and compare their thinking with the community. Narratives tie a company’s story to its financial outlook and automatically update whenever new news or earnings are released. This keeps your perspective current and actionable while reducing unnecessary noise.

When you compare your Narrative’s Fair Value with the current market price, you gain a more personalized and informed way to consider your investment decisions. For instance, with Figma, one investor might anticipate rapid growth and estimate a fair value at the higher end. Another might focus on potential risks and set a lower fair value. This clearly demonstrates how Narratives reflect each person’s individual outlook.

Do you think there's more to the story for Figma? Create your own Narrative to let the Community know!

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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