Figma Stock Down 35% After 2 Weeks: A Good Buy on the Dip?

Figma stock has fallen 35% in two weeks but remains above its IPO price. The company's revenue soared 48% in 2024, but a deceleration is expected. Figma has a sky-high valuation, making it risky for new investors. Despite this, the company's UI design software is widely used, and revenue is still growing rapidly. With zero debt and a $1.5 billion cash cushion, Figma has the potential to become a cash-generating machine for investors.

Figma Inc. (NYSE: FIG) has experienced a significant drop in its stock price over the past two weeks, falling by 35% from its peak. Despite this decline, the stock remains above its initial public offering (IPO) price of $33 per share. The company's revenue soared by 48% in 2024, reaching $749 million, but a deceleration in growth is expected in the coming quarters [2].

The rapid growth and high valuation of Figma have made it a high-risk bet for investors. The company is currently trading at nearly 37 times its estimated revenue for 2025, which is significantly higher than the valuation multiples of mature competitors such as Adobe and Microsoft [1]. This high valuation reflects the company's robust growth and potential for substantial margins, but it also leaves little room for error.

Figma's success is driven by its user interface design software, which is widely used by companies across industries. The company reported zero debt and a $1.5 billion cash cushion at the end of the first quarter of 2025, indicating a strong financial position. However, the company's bottom line entered positive territory in the first quarter, with net income of $0.04 per share, and its stock is still trading at a sky-high valuation of 496 times annualized first-quarter earnings [2].

Investors considering Figma should be aware of the potential for growth deceleration in the future. The company has not yet set a date for reporting results from the second quarter that ended on June 30, but it is expected that revenue growth will decline as the business matures [2].

Despite the challenges ahead, Figma's strong financial position and rapid revenue growth make it an attractive investment opportunity for those willing to take on higher risk. However, investors should be prepared for significant volatility and potential losses if the company fails to meet expectations.

References:

[1] https://www.forbes.com/sites/greatspeculations/2025/08/19/figma-stock-downside-to-40/
[2] https://finance.yahoo.com/news/down-35-2-weeks-figma-085200784.html