Figma (FIG 2.18%), a provider of cloud-based user interface (UI) and user experience (UX) design tools, attracted significant attention when it went public at $33 per share on July 31, 2025. Its stock opened at $85 and closed at a record high of $142.92 just two days later.
Figma initially impressed the bulls because it was growing like a weed and seemed poised to loosen Adobe's (ADBE 5.78%) grip on the UI/UX design market. However, that enthusiasm waned over the past year as its growth slowed and expenses rose.
That's why Figma's stock now trades slightly below its IPO price at $32. Does that near-80% drop from its all-time highs represent a good buying opportunity for long-term investors?
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Why is Figma a disruptive tech company?
Figma's tools allow designers to create scalable graphics, UI elements like buttons, convert static designs into animations, and access third-party apps via plugins. Its clients use its tools to build websites, mobile apps, and interactive product prototypes.
Figma challenges Adobe with cloud-native UI/UX tools that can be run directly in a web browser. By comparison, Adobe's UI/UX tools still need to be installed as desktop applications before they can be synchronized across its Creative Cloud platform. Figma also added real-time collaboration tools -- which enabled multiple users to collaborate on a single project on the cloud -- long before Adobe and other older software design companies integrated those features.
Figma operates a freemium business model. It offers a free tier for individuals and small teams, and a subscription-based tier for professional developers and larger businesses. In 2024, its number of customers that generated at least $10,000 in annual recurring revenue (ARR) grew 45% to 10,517. Its number of customers that generated more than $100,000 in ARR also rose 53% to 963 -- suggesting its forward-thinking, flexible, and cloud-native approach was freeing many software designers from Adobe's sticky subscription model.
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Key Data Points
Why did Figma's stock drop below its IPO price?
At its peak, Figma's market cap reached $60 billion -- or 57 times its 2025 revenue. That meme stock valuation became unsustainable in this wobbly market.
In 2024, Figma's revenue soared 48% to $749 million, but its gross margin dipped from 91% to 88% as it posted a net loss of $732 million -- compared with a net profit of $738 million in 2023. It attributed that steep loss to one-time stock-based compensation expenses -- mainly from Adobe's aborted acquisition and a release of its restricted stock units (RSUs) -- but all of that red ink made its stock even less appealing as interest rates stayed elevated.
In the first nine months of 2025, Figma's revenue rose 41% year over year to $752 million. However, its gross margin dropped from 87% to 83%, while its net loss widened to $1.02 billion. It continued racking up high stock-based compensation expenses related to its released RSUs. At the same time, the company's increased investments in its own AI infrastructure, AI-powered features, and new tools -- including Figma Make, Draw, Sites, and Buzz -- exacerbated that pressure.
What will happen to Figma over the next two years?
On the bright side, Figma continued to gain more high-value customers throughout 2025. By the end of the third quarter, it was serving 12,910 customers with an ARR of more than $10,000, as well as 1,262 customers with an ARR of over $100,000.
Figma also continued to expand its ecosystem through smaller acquisitions, dozens of new features, and a partnership with OpenAI that integrates its app directly into ChatGPT. Its net dollar retention rate (for customers with at least $10,000 in ARR) reached 131% in the third quarter -- up from 129% in the second quarter (but still down from 134% at the end of 2024).
For 2025, analysts expect Figma's revenue to rise 40% to $1.05 billion as its net loss widens to $1.19 billion. From 2025 to 2027, they expect its revenue to grow at a CAGR of 21% to $1.53 billion as it narrows its net loss to $421 million by the final year.
Yet with a market cap of $16 billion, Figma still doesn't look like a bargain at 12 times this year's sales. Adobe -- which is larger, growing more slowly, but firmly profitable -- trades at five times this year's sales. Therefore, Figma might still be worth nibbling on as a speculative growth play, but I wouldn't build a larger position unless its valuation cools and it stabilizes its margins.
