Figma (FIG) has long been a designer’s playground, where ideas turn into apps and creativity and collaboration meet. From startups sketching their first interfaces to big tech companies refining their digital experiences, Figma has become the tool everyone wants in their stack. But even a cult favorite is not immune to the ruthless logic of Wall Street. Since its initial public offering (IPO), FIG shares have fallen, weighed down by doubts that the hype may have outweighed the numbers.
But then Figma’s third quarter report was released and hopes were dashed. Artificial intelligence (AI)-powered tools gained new users, revenue exceeded expectations, and management focused on building a long-term platform at the expense of short-term profits. Analysts may still be divided, but there’s no denying that the conversation surrounding Figma’s AI is growing. Now, investors are starting to listen again.
So, as momentum shifts and AI drives new growth, has Figma just engineered a comeback moment?
About Figma stock
Founded in 2012 and headquartered in San Francisco, California, Figma has grown from a simple design tool to an AI-powered collaborative creative hub used by millions of people. The browser-based platform connects designers, developers, marketers, and business teams to easily ideate, prototype, and deliver digital products. The company uses tools like FigJam, Dev Mode, and Figma Make to turn creativity into real-time collaboration that connects seamlessly, visually, and deeply.
Figma’s AI capabilities enable users to design, code, and build web apps faster, turning the platform into a one-stop solution for modern digital creation. Its business model focuses on teamwork and accessibility. Competing with giants like Adobe (ADBE), Figma stands as one of the most influential forces in the global design and SaaS space. The company’s market capitalization is approximately $18.5 billion.
Figma’s Wall Street debut began on July 31st at $85 and skyrocketed to $142.92 the next day. To early investors, it looked like a masterpiece in motion. But that brilliance didn’t last long. FIG stock fell on concerns about high valuations and whispers of a tech bubble. A tepid second quarter report didn’t help stabilize the line.
Then the third quarter report was released. It was a strong performance, a bright outlook, and a new wave of optimism from analysts. FIG stock briefly soared, reminding investors why Figma captivated the market in the first place.
Still, this graph tells a somber story. Despite last week’s rebound, Figma’s stock price has fallen by a modest percentage over the past five days, most recently closing at $44, well below its euphoric opening price. This is a reminder that even the most creative companies cannot always engineer their way out of market gravity.
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From a valuation perspective, Figma stock commands a premium. Priced at approximately 25x forward earnings, FIG is well above the sector average. While this valuation once made sense at the peak of IPO excitement, it’s starting to feel a little more limited now. Although investor sentiment has cooled compared to early trading, the high multiple suggests the market still expects Figma to continue to see significant growth.
Snapshot of Figma’s strong third quarter results
The cloud-based design platform announced its third-quarter results on Nov. 5, and the numbers spoke to both ambition and growing pains. Revenues increased 38% year over year to $274.2 million. Although growth slowed slightly from last quarter’s 41% year-over-year increase, it was another strong quarter of demand, beating Wall Street expectations. Non-GAAP EPS rose 150% for the year to $0.10, which was also a pleasant surprise.
But beneath that bright headline, the details have become a bit sketchier. Operating margin increased 700 basis points sequentially but contracted 1,200 basis points to 12%. Meanwhile, gross profit margin declined to 86% from 92% in the same period last year. The cause is a sharp rise in costs, which shows that companies are in deep build mode.
Figma’s operating expenses rose 483% to $1.3 billion, with R&D expenses alone rising to $681 million and selling, general and administrative expenses reaching $645 million. Simply put, Figma is pouring resources into innovation and product growth, spending nearly $5 for every $1 in revenue. But management insists this is a price to pay for scale. During the earnings call, they described the third quarter as “Figma’s best quarter in history,” noting that the annual revenue run rate (ARR) had surpassed the $1 billion mark.
The momentum seems real. The backlog increased 15% sequentially to $517 million, almost all of which is expected to be converted within the next 12 months. Customer growth continues to be strong. Currently, 12,910 customers spend more than $10,000 annually, and 1,262 customers have an ARR of more than $100,000. Many people use three or more Figma products, which is a sign of increased stickiness.
Much of this momentum is fueled by Figma Make, the company’s new AI-driven, prompt-based design assistant. Launched earlier this year, Make has quickly become popular among top customers, with 30% of customers spending $100,000 or more using it weekly. The company introduced over 50 new features this quarter, driving adoption and driving net retention to 131%.
Management was particularly optimistic about the growing excitement among Figma users who are rapidly embracing the platform’s new AI-driven tools and features. Figma went full throttle with AI this quarter. To power AI-native workflows, we deployed tools like Copy Design, Make Kits, and remote MCP Server. The company also collaborated with OpenAI to launch a Figma app for ChatGPT, allowing users to convert chats into FigJam flowcharts and diagrams. And with the acquisition of Weavy (now rebranded to Figma Weave), we’re diving deeper into AI-driven image, video, and motion design creation.
Looking ahead, Figma’s strategy for the next quarter still appears to be quite ambitious. Management issued guidance that beat Wall Street expectations, driven by confidence in product innovation and the growing influence of AI across platforms. The team believes that AI will attract more users to the ecosystem, ultimately leading to even more revenue momentum.
That said, the growth curve is expected to slow slightly. For the fourth quarter, management expects revenue of $292 million to $294 million. This is approximately 35% growth compared to the same period last year. That’s slightly below the 38%-41% pace the company maintained over the past two quarters, but still solid.
Zooming out to fiscal 2025, management expects revenue to be between $1.044 billion and $1.046 billion, with an annual growth rate of approximately 40% at the midpoint. Non-GAAP operating income has hovered between $112 million and $117 million, making steady progress as Figma continues to grow with purpose.
Meanwhile, analysts tracking Figma expect the company’s GAAP net loss per share for fiscal 2025 to be approximately $2.32, an improvement of 38% from the prior year. Losses are then expected to further narrow by 69% annually to $0.71 per share in fiscal 2026, indicating a steady path to profitability.
What do analysts expect from Figma stock?
Figma’s third-quarter story has been viewed mixedly on Wall Street, but the spotlight remains bright. Shares rose 4% in after-hours trading on Nov. 6 after Goldman Sachs upped its price target from $50 to $54 while maintaining its “neutral” rating. The bank praised Figma’s strong quarter and encouraging fundamentals, but said the valuation was “relatively generous” and preferred a clearer risk-reward setting.
Meanwhile, Morgan Stanley took a cautious view, lowering its target to $65 from $70 and maintaining an “equal weight” rating. Analysts lowered their estimates in line with peer valuations, but acknowledged the company’s strong post-IPO performance and recent improvement in investment returns.
JP Morgan also maintained its rating at “neutral,” but lowered its target from $65 to $60. The company said Figma’s third quarter was “healthy” and the outlook for the fourth quarter is positive.
Wall Street’s verdict on Figma feels a lot like the company’s design philosophy: clean, balanced, and carefully constructed. Analysts agree that Figma’s performance is strong, proving that its AI-powered vision is more than just hype. Still, they’re not ready to hit the “buy” button just yet. FIG stock has an overall consensus rating of Hold. Ten analysts have recommended the stock, with two suggesting a “strong buy” and the remaining eight giving it a “hold” rating on the safe side.
Analysts’ average price target is $60.86, implying a potential upside of 38% from current price levels. However, the high street price target of $70 suggests the stock could rise as much as 59%.
Final thoughts about Figma
Figma’s story is a mix of innovation and investor caution. Although the company is still in the early stages of the market and public data is still limited, the third quarter results show clear operational strength. AI continues to be a driving force, driving user growth, enhancing workflows, and giving platforms new commercial momentum. Management’s pricing strategy is expected to provide a mid-to-high single-digit tailwind to earnings, which could boost near-term sales as customers rush to renew before new rates take effect.
However, with brilliance comes a shadow. Stock-based compensation soared to $1.1 billion in the third quarter, a 13x increase. Meanwhile, outstanding shares have nearly doubled, creating dilution for existing holders. Its high valuation, combined with modest growth, is enough to give even the most bullish investors pause. The expiration of the lockup in early 2026 could also weigh on prices by giving insiders the option to sell.
Still, Figma’s vision and execution cannot be ignored. AI is deepening its outer moat, collaboration remains its superpower, and once growth stabilizes, Figma may rewrite its investment story again.
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On the date of publication, Sristi Suman Jayaswal did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article are for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
