Is Figma's Plummeted Stock a Long-Term Buy at $35.50?

The SaaS sector has faced a prolonged correction since 2024, with many high-growth tech stocks retreating from their post-IPO euphoria. Figma (FIG), the collaborative design platform that rejected Adobe's $20 billion buyout offer in 2022, now trades at $35.50 as of November 26, 2025-a stark contrast to its IPO peak of $115.50 in July 2025. For value investors, the question is whether this 69% decline represents a mispricing opportunity or a cautionary tale of overvaluation.

Strong Fundamentals: A Foundation for Resilience

Figma's business model remains robust, anchored by a 132% Net Dollar Retention (NDR) rate and a $913 million Annual Recurring Revenue (ARR) run rate as of Q1 2025 according to analysis. This NDR, driven by seat expansion, plan upgrades, and product diversification, outperforms industry benchmarks and signals strong customer loyalty. Meanwhile, Q2 2025 revenue grew 41% year-over-year to $249.6 million, demonstrating consistent top-line momentum despite macroeconomic headwinds.

The company's financial health is further underscored by 91% gross margins and a 17% EBIT margin, reflecting efficient cost management and scalable operations according to financial analysis. These metrics suggest Figma can sustain profitability even as it invests in growth initiatives, such as its recent AI-driven design tools.

Adobe's $20 Billion Offer: A Benchmark for Value

Adobe's 2022 $20 billion cash offer-ultimately terminated in December 2023 due to regulatory hurdles-provides a critical reference point. At the time, Figma's private valuation aligned closely with Adobe's bid, but the failed acquisition left stakeholders with a reported $1 billion reverse termination fee. Fast-forward to 2025, and Figma's post-IPO valuation peaked at $68 billion before correcting to a current market cap of $17.59 billion. This implies a 75% discount from its IPO high, yet the company's fundamentals have only strengthened since 2022.

The cash-heavy Adobe offer, valued at $20 billion, would have diluted Figma's ownership structure less than a stock-based deal according to market analysis. By choosing independence, Figma has retained flexibility to reinvest in innovation, including AI-powered design automation and cross-platform integration. These advancements position Figma to capture market share from Adobe's Creative Cloud suite, which now faces declining growth amid shifting user preferences according to market data.

Valuation Metrics: Expensive or Justified?

Figma's current valuation metrics remain elevated: a P/E ratio of 1,754, a price-to-sales ratio of 89.57, and an enterprise value-to-sales ratio of 88.13 according to financial modeling. These figures reflect investor optimism about Figma's long-term growth potential but also highlight the risks of overvaluation. However, when compared to Adobe's 2022 offer, the current $35.50 price tag appears more rational.

At $35.50, Figma's market cap of $17.59 billion according to market data implies a 9x revenue multiple based on its Q2 2025 revenue of $249.6 million. This is a significant discount to Adobe's $20 billion offer, which valued Figma at approximately 10x 2022 revenue (assuming $2 billion in annual revenue at the time). The correction aligns Figma's valuation with more conservative growth expectations, potentially offering a margin of safety for long-term investors.

AI Innovation: A Catalyst for Sustained Growth

Figma's recent AI initiatives further bolster its case as a long-term buy. The company has integrated generative AI into its design workflows, enabling features like automated layout generation and real-time collaboration enhancements. These tools not only improve user productivity but also create a moat against competitors like Sketch and Figma's own AI-powered rivals.

Adobe, meanwhile, has struggled to keep pace with AI-driven SaaS platforms, with its stock price down 28.32% year-to-date as of November 2025. Figma's ability to innovate in this space could allow it to poach Adobe customers and expand its TAM beyond design teams to broader creative workflows.

Risks and Considerations

While Figma's fundamentals are compelling, investors must weigh the risks. The SaaS sector remains in correction mode, with multiples for high-growth tech stocks still depressed. Figma's P/E ratio of 1,754 and P/S ratio of 89.57 according to financial analysis suggest the market is paying a premium for future growth, which may not materialize if macroeconomic conditions worsen. Additionally, the company's liquidity position-though strong with a current ratio of 3.54 according to financial data-could be tested if revenue growth slows.

Conclusion: A Compelling Long-Term Buy?

For value investors, Figma's current stock price of $35.50 represents a more attractive entry point than its inflated IPO valuation. The company's 132% NDR, 41% revenue growth, and AI-driven innovation provide a durable foundation for long-term value creation. While the valuation metrics remain high, they are now more aligned with the company's fundamentals and Adobe's original $20 billion offer.

In a SaaS landscape marked by volatility, Figma's ability to maintain profitability, expand its customer base, and lead in AI adoption positions it as a resilient long-term play. For investors with a multi-year horizon, the current price offers a compelling opportunity to participate in a company that has proven its ability to outperform even in a challenging market.