Figma's Auction-Style IPO Aims to Maximize Demand, Raise $1.03 Billion

Figma is running its IPO like an auction to capitalize on strong demand. The company is asking prospective investors to state the number of shares they wish to buy and at what price. This approach is designed to give Figma more granular information on investor valuations and potentially allow it to capture more enthusiasm for its stock. The IPO is expected to price on July 30 and aims to raise up to $1.03 billion.

Figma, a leading design software company, is set to conduct an auction-style Initial Public Offering (IPO) to capitalize on strong investor interest. The innovative approach, which involves investors submitting limit orders rather than market orders, is aimed at obtaining precise insights into investor valuations and capturing hidden enthusiasm for the stock. This strategy, previously employed by companies like DoorDash and Airbnb during the pandemic, indicates a potential revival in the U.S. IPO market and growing interest in high-quality tech stocks [1].

The San Francisco-based company plans to raise up to $1.03 billion through this IPO. By requesting limit orders, Figma seeks to understand the true demand for its shares, potentially avoiding the inflated perceptions of demand that often accompany traditional IPOs. The company aims to issue approximately 37 million shares, priced between $25 and $28 each, potentially raising up to $1 billion and valuing the company at $16.4 billion fully diluted. The IPO is expected to be priced on July 30, with shares trading on the NYSE under the ticker FIG, underwritten by Morgan Stanley, Goldman Sachs, Allen & Co., and JPMorgan [1].

Figma's approach may help it achieve a valuation close to the $20 billion Adobe offered in 2022, a deal later abandoned due to regulatory concerns. The company plans to use the net proceeds from the offering, along with its existing cash reserves, to repay $330.5 million of outstanding indebtedness under the Revolving Credit Facility. The remaining net proceeds, if any, would be used for working capital and other general corporate purposes [2].

The company's last-twelve-month (LTM) revenue totaled $821 million, representing a 46% year-over-year (YoY) increase. The company’s adjusted operating margin was at 18%. Figma has applied for listing its common stock on the NYSE under the ticker symbol FIG [2].

Figma's platform is utilized by 95% of the Fortune 500 and 78% of the Forbes Global 2000, demonstrating its extensive use across various sectors. The company has significantly broadened its offerings, introducing features like Dev Mode for developers, FigJam for brainstorming, and innovative AI-driven tools such as Figma Make, which can create working prototypes based on user prompts [3].

The Figma IPO follows public debuts by tech companies such as CoreWeave (CRWV) as the stock market pushes forward, undeterred by multiple headwinds. The IPO is managed by Morgan Stanley, Goldman Sachs, Allen & Company, and JPMorgan [2].

References:
[1] https://www.gurufocus.com/news/2995848/figma-fig-adopts-auctionstyle-ipo-to-gauge-investor-demand
[2] https://stocktwits.com/news-articles/markets/equity/figma-sets-ipo-pice-range-at-25-28-retail-eyes-multi-bagger-potential/ch8M7K4R5s7
[3] https://www.benzinga.com/markets/ipos/25/07/46537119/figmas-market-debut-could-value-design-giant-at-16-billion-down-from-adobes-20-billion-deal