Figma (FIG +2.05%) is one of the most talked-about design platforms in the tech world. Beloved by product teams, developers, and designers alike, the company's collaborative design software has become a mainstay for building digital products. Despite this, even the best-loved tools can struggle when Wall Street expectations run too high.
Over the past 12 months, Figma shares have fallen roughly 54%, reflecting growing investor concern that the stock's once-lofty valuation has far outpaced the company's actual financial performance. With shares now at multi-year lows, the question is whether this is a buying opportunity.
A high price for its potential
Despite the steep sell-off, Figma's stock remains far from cheap. The company's market capitalization stands at roughly $27 billion (as of Oct. 27), a figure that still implies tremendous expectations for future growth. To put that number in perspective, Figma reported $478 million in revenue through the first two quarters of fiscal 2025 and is guiding for full-year revenue between $1.021 billion and $1.025 billion, according to its latest earnings release. That would represent a robust 37% increase from 2024. It's impressive by most standards, but hardly enough to justify a $27 billion valuation.
Image source: Getty Images.
Even after the stock's major correction, the company is priced as if it will sustain years of high double-digit growth -- a tall order in an increasingly competitive design and collaboration market dominated by heavyweights like Adobe (ADBE +0.32%) and other upstarts such as Canva.
Signs of fundamental progress
While the valuation may be rich, Figma's business fundamentals are definitely moving in the right direction. The company's income statement shifted from a loss of $4.53 per share in the first six months of 2024 to a positive $0.10 per share over the same period in 2025. That's a great shift, and demonstrates management's discipline and the scalability of Figma's business model. In addition, revenue grew 41% year over year in the second quarter.
Perhaps the most intriguing development came earlier this month, when OpenAI CEO Sam Altman highlighted Figma's integration with ChatGPT. Under this new collaboration, ChatGPT users will be able to interact directly with Figma through ChatGPT. The company is also working on a collaboration with Google.
The addition of integration with artificial intelligence (AI) is certainly a plus for the platform. If successful, the combination could expand the company's reach among many ChatGPT users and position Figma as a go-to design interface in an increasingly AI-assisted creative world. At the same time, the platform still retains its great utility for solely human users.
NYSE: FIG
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The valuation challenge
Still, even with improving financials and AI-driven potential, investors must grapple with one undeniable fact: Figma's valuation remains steep. Trading at more than 25x sales projections, the company would need to sustain its current growth rate for years -- or deliver a major profitability surge -- to bring its market cap in line with its current price.
Stocks like this can command premium multiples, but only if investors believe the company's runway remains both long and defensible. Figma's challenge lies in balancing those expectations with realistic earnings performance. If the broader market becomes more selective about paying for "potential," Figma shares could struggle to regain their footing.
The bottom line
At the end of the day, Figma is a good company with an excellent product, and its partnership with OpenAI could spark a new wave of user growth and unlock additional monetization avenues. However, the stock still reflects a lot of optimism about what the company might achieve years down the line -- optimism that has already proven costly for shareholders.
For long-term investors who believe in Figma's leadership position in collaborative design and its ability to harness AI effectively, the recent pullback could be an attractive entry point. But for most, patience may be the wiser move.
I think this can be a good stock to own. It will just take patience to see if shares come back into reality. Until the company's financial performance catches up to its $27 billion valuation, Figma may remain a stock that's easier to admire than to buy.