Should You Buy Figma Stock After Its 55% Post-IPO Drop?

Key Points

• Figma stormed right out of the gates with its 2025 IPO, gaining more than 150% on its first day of trading.
• However, shares are down big time since then, increasing the potential for investors to find value in this high-growth name.
• Notably, Wall Street analysts project significant upside in the stock despite the company's lackluster first-ever earnings report.

Arguably the most anticipated IPO during the second half of 2025 was that of technology stock Figma NYSE: FIG. The nearly 158% gain that Figma’s shares posted on their first day of trading demonstrated this built-up anticipation.

The market clearly saw a much brighter outlook for the stock than the investment bankers who underwrote it. However, since that first day's action, the stock is down around 55% as of the Sept. 8 close. Considering this huge correction, it's reasonable to wonder whether Figma stock now represents a compelling opportunity for investors.

Below, we’ll work to answer that question in the wake of Figma recently releasing its first earnings report ever.

Why Figma Excited Investors

Driving the big-time interest in Figma is the fact that the company has created a differentiated product in a huge market: digital design. Through traditionally dominating this market, Adobe NASDAQ: ADBE has become one of the 10 most valuable software stocks in the world. Adobe has faced limited competition in this market for years. Thus, it’s understandable that Figma excites investors as a disruptive force.

Figma’s software helps businesses turn an idea into an application that can generate revenue. Businesses deploy their software to create a great user experience (UX), which is key to developing an application that people actually want to use. For example, the simple and appealing UX of Robinhood Markets' NASDAQ: HOOD platform has been key to its success. It has helped the company gain a significant share of the investment brokerage market. This isn’t to suggest that Robinhood used Figma in creating its app, but rather to show the value proposition products like Figma’s can offer.

Notably, Figma’s platform offers important advantages over Adobe’s solutions. Figma’s unified platform lets creative and coding teams work together easily. They can edit applications simultaneously and in real time. By contrast, collaborating using Adobe’s solutions is much more cumbersome. This can cause confusion and inefficiency when multiple people work on the same project.

Figma’s ability to remedy this problem is a key reason why the firm generated nearly $900 million in revenue over the last 12 months. With a self-estimated total addressable market of $33 billion, Figma is less than 3% penetrated into its opportunity. This provides a long runway for potential growth.

Markets Left Unimpressed by FIG’s First Ever Report

In Q2, Figma’s sales grew by 41%, very slightly beating out analysts' expectations. However, shares cratered by nearly 20% in reaction to the results on Sept. 4, as the firm missed sorely on earnings per share (EPS).

Still, it is important to note that Figma posted a positive adjusted operating margin of 5% and an adjusted free cash flow margin of 24%. For the full year, Figma expects midpoint revenue growth of 37% and a midpoint adjusted operating margin of around 9%.

Additionally, the company’s net dollar retention rate among customers with annual recurring revenue of $10,000 or more sat at a healthy 129%. Customers spent 29% more than they did in the prior year’s quarter, showing that Figma’s products are adding value. Figma is also in a strong position when it comes to liquidity, with $1.6 billion in cash, cash equivalents, and marketable securities, and only $65 million in debt.

After the company’s Q2 report, several Wall Street analysts significantly lowered their price targets on Figma. Those analysts tracked by MarketBeat lowered their targets by an average of 15%, moderately less than the stock’s 20% fall. The MarketBeat consensus price target on Figma is approximately $67.50, implying around 28% upside compared to the stock’s Sept. 8 closing price. Furthermore, among analysts who updated or initiated their target after Figma’s earnings, the average price target is $71.80. That figure implies nearly 37% upside in shares.

Adobe’s Attempted Purchase Price Suggests FIG Is Set Up for Success

Overall, investors would be right to feel frightened by Figma’s eye-watering rise on its first day of trading. However, the stock has settled back down to earth, having a market cap of around $25.7 billion as of the Sept. 8 close.

That’s not too far off from the $20 billion Adobe attempted to buy Figma for back in September 2022, and Figma’s quarterly revenues today are around 90% higher than they were at that time. This provides further evidence that the stock may be attractively, or at least fairly valued.

Given Figma’s considerable ability to continue growing its business and its solid financial position, it would not be shocking to see shares perform strongly over the coming years.