Figma shares slump as earnings miss lofty post-IPO expectations
Figma shares plunged 19 per cent on Thursday as a slight beat in its first earnings report following its blockbuster July market debut unnerved investors, with a looming share unlock further weighing on sentiment.
The cloud-based collaborative-design software platform's widely watched IPO set a high bar, and with shares now sharply off their peak, investors are reassessing the company's valuation amid volatility and looming share unlocks.
Its IPO was priced at $33 per share, giving the company a valuation of $19.34 billion. The stock surged 250 per cent on debut, marking a standout entry to public markets.
Figma is set to lose about $6 billion on Thursday from its $33.2-billion market capitalization, if losses hold, with shares off more than 52 per cent from their peak as of Wednesday's close.
"The combination of lofty expectations that are not handily exceeded, a very high valuation in absolute and relative terms and worries over an increase in the free float upon expiry of a post-IPO lock-up would be a challenge for any company's share price, and Figma's seems to be no different," said Russ Mould, investment director at AJ Bell.
The company reported second-quarter revenue of $249.6 million, up 41 per cent from a year earlier and slightly ahead of the $248.8 million consensus. Adjusted earnings per share came in at $0.09, edging past the $0.08 per share estimate.
Adding to the pressure, it disclosed that the lock-up period for certain employees would expire later this week, potentially increasing share supply. Meanwhile, five major venture capital holders remain under an extended lock-up, with staggered releases through mid-2026.
With just 41 per cent of its outstanding shares available as free float, Figma's stock is especially prone to volatility, as limited liquidity tends to amplify price movements.
The platform's shares trade at 299.2 times profit expectations, several times the 15.3 price-to-earnings multiple of legacy competitor Adobe and 23.7 for the broader S&P 500 index.
While analysts are optimistic about Figma's long-term growth, near-term volatility is expected to persist as the company navigates pricing changes, AI integration and investor scrutiny.
