Figma Stock Plummets 50% from IPO Despite $1B Revenue Run Rate

What happened

Figma's stock has fallen over 50% from its mid-2025 IPO price, reflecting investor skepticism amid post-IPO supply dynamics and AI-related uncertainties. The company recently crossed a $1 billion annual revenue run rate, highlighting its strong growth trajectory and category leadership in collaborative design software. However, management has explicitly warned that near-term AI investments are compressing gross and operating margins, challenging the historically high ~91% gross margins. Significant hosting commitments of $535.8 million and competitive pressures from AI-driven tools add to the financial headwinds. Ongoing risks include stock-based compensation dilution and the need for flawless execution on AI feature quality to sustain enterprise adoption.

Implication

The revenue milestone reinforces Figma's growth potential, but it is overshadowed by management's guidance on AI-driven margin compression, which could erode profitability. High hosting commitments and competitive risks in the AI space necessitate cautious monitoring of cost controls and adoption trends. Valuation remains elevated at a ~$20.6B market cap, with limited near-term upside without clear operating leverage. Post-IPO supply overhangs and stock-based compensation dilution further cloud the investment case. Until AI investments demonstrate sustainable returns or margin stabilization, the HOLD recommendation is prudent to avoid downside from execution missteps.

Thesis delta

The $1 billion revenue run rate is a positive development but does not materially shift the investment thesis, as AI-related margin pressures and post-IPO risks persist. This reinforces the existing HOLD stance, emphasizing that growth alone is insufficient to justify a buy without improved profitability and risk mitigation.