Does Figma pay a dividend?
No, Figma does not pay a dividend. It's extremely rare for an IPO stock to pay a dividend. Typically, these are start-ups that are aiming for growth, using the IPO as a means of raising capital and to give insiders, like company employees and earlier investors, a way to sell their stock. Therefore, they don't tend to pay dividends.
Though Figma is profitable, investors shouldn't expect to receive a dividend from the company for at least several years. In the software sector, typically only more established companies pay dividends, and not all of them do. Adobe, for example, does not currently pay a dividend, though it did earlier in its history.
In its S-1 filing, Figma said, "We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends in the foreseeable future."
How to invest in Figma through ETFs
One ETF that snatched up shares of Figma on opening day was Cathie Wood's ARK Next Generation Internet ETF (NASDAQ:ARKW), buying 60,000 shares of the hot software stock. It's unclear whether any other actively managed ETFs own Figma right now, though some are likely to buy the stock.
At this point, Figma is too new to belong to any index that would be tracked by a passive ETF, though that could change in the coming months.
Will Figma stock split?
Figma could have a stock split in the future, but it would be surprising to see a stock split in the next year. With the share price currently above $100, a split wouldn't be unheard of, but it would be unusual for a recent IPO, especially one trading at a high valuation, to split its stock so soon. Still, most successful stocks eventually split as they grow. If Figma stock keeps growing over the long term, a split is likely.
Should you invest in Figma?
As a company, Figma has a lot of attractive qualities. It's growing quickly, with revenue up 46% in its most recent quarter and trailing-12-month revenue of $821 million. It has strong margins across the board, including a generally accepted accounting principles (GAAP) operating margin of 17% in its most recent quarter, and several quarters of profits.
The company is also a leader in web design software despite having less than $1 billion in revenue over the last four quarters, and Adobe's attempt to acquire the company shows the quality of Figma's product and business. Adobe was set to purchase Figma for $20 billion three years ago before regulators blocked the deal, claiming it would hurt competition in the industry.
While Figma's business looks strong, prospective investors also have to consider its valuation, and after the post-IPO surge, the stock is pricey. As of Aug. 1, when the stock was trading at $123 a share, its market cap had reached $60 billion, giving it a price-to-sales (P/S) ratio of 73.
High valuations aren't unusual in the software sector, but 73 times sales is extreme, even for a fast-growing new issue like Figma. By comparison, Adobe trades at a P/S of 7 and has a price-to-earnings ratio (P/E) of 23, though it's growing much more slowly.
In the S&P 500, only one company has a higher P/S ratio: Palantir (PLTR +0.11%), whose P/S ratio has recently been above 100. The number reflects its accelerating revenue growth, improving operating margins, and advantages in artificial intelligence (AI). Figma's valuation shows that it's priced for perfection, meaning it could be vulnerable to weaker-than-expected results or a macroeconomic slowdown.
