The only design many investors had on Figma (FIG 5.03%) stock on Tuesday was to sell it aggressively. On the back of a drastic price target cut by an analyst tracking the design software company, market players traded out of the shares, leaving them with a loss of almost 11% on the day.
That's one deep cut
Before market open, Piper Sandler's Hannah Rudoff cut her company's fair value assessment on Figma in half, reducing it to $35 per share from the previous $70. Despite that rather significant change, Rudoff maintained her recommendation of overweight (read: buy) on the specialized tech company's equity.
Image source: Getty Images.
The adjustment was part of a broader reconsideration of the software segment of the tech market. According to reports, Rudoff believes investor bearishness about its future will continue to affect sentiment for the segment's titles.
Instead, the analyst opined, people might be better off now focusing on some of the hotter areas in the tech world, such as hyperscalers (operators of high-capacity data centers).
NYSE: FIG
Key Data Points
Software softness
In my view, many software stocks have been unfairly punished for appearing to steadfastly remain in "legacy," technology, instead of a more advanced field like artificial intelligence (AI).
In Figma's case, looks can be deceiving. The company has not only embraced AI as an assistive technology for its offerings, it went so far as to acquire Weavy -- a start-up that uses AI for generating images and video -- last October. The gloomy sentiment that now pervades many stocks even tangentially associated with software is unsustainable, I think, and I'd say the same for Figma's depressed stock price.
