Wednesday was a rough day for Figma (FIG 4.38%), Robinhood Markets (HOOD 3.62%), and Shopify (SHOP 2.16%) investors. The three growth stocks tumbled between 6% and 9%, disappointing investors as recent weakness intensifies for the one-time market darlings.
As the market was selling, Cathie Wood was buying. The co-founder CEO of Ark Invest also its chief investment officer. She spent Wednesday adding to existing Ark Invest positions in all three stocks. Figma, Robinhood, and Shopify have now fallen 84%, 35%, and 49% respectively, from their recent highs. Let's take a closer look.
Image source: Getty Images.
1. Figma
It's been a rocky ride for investors since Figma went public last summer. It hit the market at $33, only to trade as high as $142.92 early in its trading history. It's a broken IPO today.
Figma offers its growing user base an AI-powered platform that simplifies the design process for websites, apps, and other digital products. As the market markdowns continue for software companies that could be upended by the AI revolution, Figma should be leading the charge instead of taking the hit.
This doesn't mean that Figma hasn't earned at least some of its downticks. Despite roughly checking the "beat and raise" box in its first couple of quarters on the market, business is slowing. It has another big test next week, when it reports its fourth-quarter results. It's not a good sign to see the shares retreating ahead of that critical financial update.
NYSE: FIG
Key Data Points
If there's a silver lining heading into next Wednesday's financial report, it's that even a whiff of good news can send the shares higher after seeing Figma stock plummet 84% from its August peak. Don't assume that it's going to be an easy recovery. Just because the ceiling is high doesn't mean that the floor is close.
Revenue growth has done nothing but decelerate since Figma went public last year.
- Q1 2025: Up 46%
- Q2 2025: Up 41%
- Q3 2025: Up 38%
The guidance it issued back in November calls for 35% top-line growth in next week's fourth-quarter performance update. This will all follow the 48% increase it posted for all of 2024. It's a big concern for investors in IPO stocks, fearing that they are buying into a peaking company leaving better days behind.
It's not all bad news for Figma. Its largest customers are growing even more engaged on the platform. Figma's net dollar retention rate for customers generating a run rate of at least $10,000 annually was 131%. In other words, its top customers are spending 31% more on Figma than they were a year ago. This net dollar retention rate is also a step up from the 129% it posted in the second quarter.
Figma has more than 13 million users, with 12,910 paid accounts on track to spend at least $10,000 apiece in the coming year. Figma makes it easier to design effective digital offerings. The market doesn't keep success stories like this going as broken IPOs for long.
2. Robinhood Markets
Figma may have taken a hit ahead of its upcoming financial update, but Robinhood's 9% slide on Wednesday was largely due to its actual mixed fourth-quarter results announced after Tuesday's market close. The online trading platform's revenue rose 27% to $1.28 billion, but that fell short of analyst revenue forecasts. It did beat on the bottom line by a narrow margin, but even that might earn an asterisk.
NASDAQ: HOOD
Key Data Points
At least five analysts lowered their price targets on the shares on Wednesday, including one who called the earnings beat a miss if you normalize for the unexpectedly low tax rate in the quarter. Robinhood also raised some concerns with its capital expenditures guidance for the year ahead.
Cryptocurrency and options trading make up the lion's share of its transaction-based revenue. There's been a slowdown on both fronts as crypto winter continues to cool interest on digital currencies. Stock trading activity has also weakened. Robinhood is faring better with its nascent predictive markets offerings, but that growth may not be able to overcome a continued slowdown elsewhere.
3. Shopify
Like Robinhood, Shopify stock slid on Wednesday after failing to please investors with its quarterly results. The online marketplace operator posted a 31% jump in fourth-quarter revenue, lifting full-year results 30% higher. This is a step up from the 26% increase it posted for all of 2024, and its strongest top-line jump since 2021. Shopify's 19% free cash flow margin for the quarter stretches a streak of double-digit free cash flow margins to 10 quarters. Yes, a double-digit streak for a potent double-digit margin metric.
Shopify shares initially moved higher on the report, but would close 6% lower by Wednesday's closing bell. At least four analysts would lower their price targets during the day. One called it a "beat and mixed" performance. Another Wall Street pro blamed valuation compression across tech platforms for the softening stance.
When a stock stumbles after a seemingly strong performance, Cathie Wood gets interested. She was a buyer on Wednesday.
