Figma's FIG Stock Plummets 5% Amid Legal Storm and Insider Exodus – Is the Design Giant's IPO Glow Gone?

Summary
• Figma (FIG) tumbles 5.06% to $30.001, breaching its IPO price of $33.00
• Class-action lawsuit alleges misuse of user data for AI training, sparking regulatory scrutiny
• Executive selling spree accelerates with CEO offloading $112M in shares
• Options market surges: 2026-01-23 28-strike puts trade at 56% implied volatility

Figma’s post-IPO euphoria has evaporated as a perfect storm of legal, governance, and market sentiment issues collides. The stock’s 5.06% intraday drop—its lowest since the IPO—reflects a confluence of existential risks. With insiders offloading shares and a lawsuit threatening its AI strategy, the design platform’s valuation premium is unraveling. Traders are now hedging with volatility-heavy options as the stock tests critical support levels.

Legal Allegations and Executive Exodus Trigger Sharp Selloff
The selloff stems from a class-action lawsuit alleging Figma trained AI models on user-generated designs without consent, a direct threat to its core product roadmap. Simultaneously, insider selling has intensified: CEO offloaded $112.98M in shares, CFO sold $450K, and CTO dumped $11.86M. These actions signal internal skepticism about the company’s ability to navigate regulatory and competitive pressures. The lawsuit, combined with rising competition from Penpot and Adobe’s AI tools, has eroded investor confidence in Figma’s moat.

Application Software Sector Under Pressure as Adobe Drags Down Peers
The broader application software sector mirrored FIG’s decline, with Adobe (ADBE) down 2.1%. Adobe’s recent AI-powered design tools and enterprise adoption have positioned it as a direct competitor, amplifying Figma’s vulnerability. The sector’s 1.5% intraday drop underscores a broader risk-off sentiment toward design SaaS players amid regulatory scrutiny of AI training practices.

Options Playbook: Capitalizing on Volatility with Strategic Puts and Calls
• RSI: 8.37 (oversold)
• MACD: -1.49 (bearish divergence)
• Bollinger Bands: 32.78 (lower band) vs. 30.00 (current price)
• 200D MA: N/A (no data)
• 30D Support: 37.27–37.43 (far above current price)

Technical indicators suggest a potential rebound from oversold levels, but the stock remains trapped in a bearish channel. The 2026-01-23 28-strike puts (FIG20260123P28) and 28.5-strike calls (FIG20260123C28.5) stand out. The puts offer 56.00% implied volatility and 76.62% leverage, ideal for downside protection. The calls, with 54.88% IV and 16.51% leverage, balance bullish exposure with liquidity (9,055 turnover).

FIG20260123P28:
• Code: FIG20260123P28
• Type: Put
• Strike: $28
• Expiry: 2026-01-23
• IV: 55.14% (high volatility)
• Leverage: 106.71% (high reward)
• Delta: -0.1982 (moderate sensitivity)
• Theta: -0.0101 (slow decay)
• Gamma: 0.1142 (high sensitivity to price swings)
• Turnover: 540
• Payoff (5% downside): $2.00 (max profit if price falls to $28.50)
• Why: High leverage and IV make this ideal for a 5% drop scenario.

FIG20260123C28.5:
• Code: FIG20260123C28.5
• Type: Call
• Strike: $28.50
• Expiry: 2026-01-23
• IV: 54.88% (moderate volatility)
• Leverage: 16.51% (balanced reward)
• Delta: 0.7369 (strong directional bias)
• Theta: -0.1549 (rapid decay)
• Gamma: 0.1344 (high sensitivity to price swings)
• Turnover: 9,055
• Payoff (5% downside): $0.00 (out-of-the-money)
• Why: Liquidity and moderate IV position this as a hedge against a rebound.

Action: Aggressive bears should prioritize the 28-strike puts for leverage, while cautious bulls may use the 28.5-strike calls as a volatility play. Watch for a break below $29.83 (intraday low) to confirm bearish momentum.

Backtest Figma Stock Performance
The backtest of FIG's performance after a -5% intraday plunge from 2022 to the present reveals a challenging period for the stock. The maximum return during the backtest was -15.88% over 30 days, with a 3-day win rate of 22.86% and a 10-day win rate of 25.71%. These results suggest that while there were brief periods of recovery, the overall trend was negative, and the stock underperformed in the aftermath of the plunge.

Bullish Bounce or Bearish Breakdown? Here's How to Position for the Next Move
Figma’s 5% drop has created a critical inflection point. While oversold indicators hint at a potential rebound, the lawsuit and insider selling cast a long shadow. Adobe’s 2.1% decline suggests sector-wide caution, but FIG’s unique risks—legal, governance, and competitive—make it a high-volatility play. Traders should monitor the $28.50 support level and the lawsuit’s regulatory implications. For now, the 28-strike puts offer the most compelling risk-reward profile. If Adobe (ADBE) stabilizes, it could signal a sector-wide recovery, but FIG’s path remains fraught. Act now: Hedge with the 28-strike puts or target a rebound with the 28.5-strike calls, but brace for further downside if the $29.83 level breaks.