Down 70%, Is Figma Stock A Buy?

December 19th, 2025 by Trefis Team
FIG: Figma logo
FIG
Figma

After peaking near $143, Figma stock (NYSE:FIG) unraveled for almost five consecutive months, eventually stabilizing at around $37 per share. The big unwind has erased the big scarcity premium the stock saw post the IPO and flushed out momentum-driven capital. So with the hype gone and valuation reset, has one of the more interesting franchises in design software become investable again? It sure looks like it.

Image by 200 Degrees from Pixabay

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 Growth Is Slower, but Healthier

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Figma’s first full quarters as a public company have demonstrated resilience rather than deterioration. The phase of hyper-growth has moderated, but the quality of growth has improved.

  • Figma surpassed a $1 billion annualized revenue run rate, reporting Q3 revenue of $274 million, up 38% year over year.

  • Net Dollar Retention rose to 131% among customers spending over $10,000 annually, indicating rising spend from existing accounts.

  • Despite elevated AI-related investment, Figma delivered non-GAAP net income of $62.4 million, or $0.10 per share, comfortably beating expectations.

  • This could be a sign of a company executing quietly, despite the public market scrutiny post its listing.

 Valuation Moves From Excess to Reality

The selloff has been driven less by fundamentals and more by an overdue valuation reset, as well as an early lock-up expiration triggered in early September for approximately 25% of eligible employee-held stock.

  • At its peak, Figma traded above 60x forward revenue, a level that history shows is nearly impossible to sustain.

  • At $37 per share, the stock now trades around 18x estimated 2025 revenue and about 100x projected earnings.

  • While still not cheap in absolute terms, the multiple now looks reasonable relative to high-quality software peers such as Snowflake (16x) and Datadog (14x).

With 86% adjusted gross margins and UI and UX design market share estimated at over 40%, Figma’s valuation probably aligns reasonably with its business reality.

AI as a Force Multiplier, Not a Threat

One of the biggest early fears was that AI would commoditize design and weaken Figma’s relevance. The opposite has played out.

  • By late Q3 2025, 30% of customers with over $100,000 in ARR were using Figma’s AI-powered prototyping tools such as Figma Make on a weekly basis.

  • AI has lowered the barrier to entry for non-designers, pulling product managers, engineers, and founders into the ecosystem.

  • This expands Figma’s addressable user base from a core of just professional designers to a much wider audience.

Why the Selling Pressure May Be Less Pronounced 

Several technical headwinds that weighed on the stock appear to be fading.

  • Much of the immediate selling pressure from employees and early venture capital investors has already hit the market. Following the early lock-up release in September and the primary IPO lock-up expiry on November 7, 2025, the initial “panic selling” phase has largely been absorbed.
  • Unlike a typical one-time IPO lock-up expiry, Figma’s extended lock-up spreads the release of its remaining locked-up shares across four tranches in 2026, reducing a potential supply shock to a predictable trickle.

  • Despite macro uncertainty, Wall Street remains constructive on the business itself. The average 12-month price target currently sits over $60, likely indicating that investors see a “valuation floor” near current levels, even with the staggered 2026 unlocks ahead.

The Verdict: Buy, Hold, or Wait?

The setup has materially improved.

  • On the bullish side, investors are getting a category-defining software platform with competitive advantages, improving profitability, and $1.6 billion in cash at a valuation close to its $33 IPO pricing. The excess has been purged, and the stock appears to be gradually reflecting potential earnings power rather than narrative.

  • On the cautious side, competition from Adobe and an increasingly capable AI-native Canva remains real. If revenue growth slips below the consensus 30% in 2026, the stock could see further corrections.

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