Figma, the design software company, has recently become a focal point for investors following its first quarterly earnings report as a public entity. Despite showcasing impressive sales growth and unveiling new AI-driven features and acquisitions, the company’s revenue guidance fell short of investor expectations. Additionally, a major filing for potential new share issuance has raised concerns, coinciding with the expiration of insider lockup periods.
These developments have led to significant volatility in Figma’s stock price, which has plummeted nearly 40% over the past month. Investors are now questioning whether the company’s slowing guidance and increased share supply indicate a shift in its growth trajectory and risk profile.
A popular narrative suggests that Figma’s shares are undervalued by 16.5%, with the potential for upside due to its strong revenue growth, profit margins, and leading position in the design software market. The company’s AI product expansion and widespread enterprise adoption, including use by 95% of Fortune 500 companies, are key factors fueling this optimism.
However, the prospect of slower growth or increased competition from rival AI offerings could challenge the belief that Figma remains undervalued. On the other hand, some analysts argue that Figma is priced higher than its industry peers, raising questions about whether the premium valuation is justified or if investor enthusiasm is overreaching.
