Figma Shares Plunge 3.58% Amid 38% Revenue Growth, Rank 444th in Trading Volume

Market Snapshot

Figma (FIG) closed on January 14, 2026, with a 3.58% decline, marking one of the largest drops in the tech sector. Trading volume totaled $290 million, a 39.8% decrease from the prior day’s volume, ranking the stock 444th in market activity. Despite a 0.5% after-hours rebound following Q3 2025 earnings, the stock remains near its 52-week low, reflecting persistent investor skepticism. The drop contrasts with Figma’s recent revenue growth, which hit $274.2 million in Q3 2025 (38% YoY), yet struggles to translate into sustained market confidence.

Key Drivers

Figma’s Q3 2025 earnings report highlighted strong revenue growth and improved profitability metrics, yet the stock’s decline suggests a disconnect between financial performance and market sentiment. The company reported $274.2 million in revenue, surpassing the $263.9 million forecast, and achieved a $1 billion annual revenue run rate. Gross margin reached 86%, and adjusted free cash flow margin hit 18%, signaling operational efficiency. However, the stock’s poor performance may stem from concerns over profitability: despite revenue gains, Figma’s net income for the fiscal year ended December 31, 2025, totaled $20.93 million (9.17% margin), a modest improvement from prior years.

The company’s guidance for 2025 also raised questions. Figma projected $1.044–1.046 billion in revenue for the year, a 40% YoY increase, but the market may have discounted these forecasts due to inconsistent profitability. For instance, in Q2 2025, the company reported a $52.18 million net loss (-10.91% margin), while Q3’s profit of $44.88 million (9.17% margin) was an anomaly. Such volatility could undermine confidence in the sustainability of its growth model. Additionally, operating income in Q3 2025 grew to $39.75 million (17.4% margin), but this followed a $113.68 million operating loss in Q2 2025, highlighting cyclical financial instability.

CEO Dylan Field’s emphasis on AI-driven innovation and international expansion may not yet align with investor expectations. While the company launched several AI tools and saw 42% YoY growth in international revenue, these initiatives remain in early adoption phases. The lack of concrete metrics on AI’s contribution to revenue or customer retention—despite claims of “consumption-based models gaining traction”—leaves room for skepticism. Furthermore, Figma’s net dollar retention for high-ARR customers (131%) is strong, but it may not offset broader concerns about cost management. Operating expenses in Q3 2025 totaled $169 million, up from $130.9 million in the prior year, raising questions about scalability.

Market dynamics and analyst sentiment further weigh on the stock. Figma’s trailing P/E ratio is effectively negative (-95.58% profit margin), and its forward P/E of 81.97 suggests high valuation risks. Despite a 38.00–57.89 price target range from analysts, the stock’s 61.93% decline over the past year lags behind the S&P 500’s 18.55% gain. Stifel analysts recently initiated a “Hold” rating with a $40 price target, citing uncertainty around profitability and competitive pressures in the design software market.

The recent earnings report also revealed mixed cash flow trends. Total cash reserves stood at $1.58 billion as of the last quarter, but levered free cash flow remains unreported, complicating assessments of liquidity. High debt/equity ratios (4.41%) and a 441.09 EV/EBITDA multiple underscore structural weaknesses. While Figma’s 38% YoY revenue growth is impressive, the absence of consistent operating cash flow generation—evidenced by a $926.1 million net loss in the trailing twelve months—highlights the challenges of scaling a high-growth tech company without robust margins.

In summary, Figma’s stock decline reflects a tug-of-war between revenue momentum and profitability concerns. While the company has demonstrated operational improvements and strategic innovation, inconsistent earnings, high expenses, and a lack of clear AI monetization pathways have dampened investor enthusiasm. The market will likely demand sustained profitability and clearer guidance on AI’s financial impact before the stock regains upward momentum.