Figma Stock Plummets 27.4% Post-IPO Surge

Figma, a prominent design software company, witnessed a substantial decline in its stock price on Monday, plummeting 27.4% to $88.60. This drop occurred on the third trading day following its much-anticipated initial public offering (IPO). The company's stock had initially surged 250% on its first day of trading, reaching $115.50, and continued to rise to a peak of $142.92 the following day. However, by Friday, Figma's market capitalization had soared to $595 billion, nearly tripling the acquisition price proposed by Adobe in 2022, which was ultimately canceled. On Monday, the company's market value had decreased to approximately $452 billion.

Analysts have raised concerns about Figma's valuation, suggesting that the market's optimism may be overstated. Oliver Rodzianko, an analyst, assigned Figma a "hold" rating, acknowledging the company's robust business fundamentals but cautioning about potential risks associated with its high valuation. Daniel Jones, another analyst, recommended a "sell" rating, arguing that the stock's price was overly idealized despite his positive outlook on the company's business and growth prospects.

Figma specializes in developing web-based collaboration software that enables users to co-edit presentations, digital whiteboards, and designs for websites and applications. In its preliminary second-quarter financial report, Figma reported revenue of $247 million to $250 million, representing a year-over-year growth of approximately 40%, and an operating profit of $9 million to $12 million. Despite the recent volatility, Figma remains a favored company among investors, with its stock price rising 4.5% to $92.55 in pre-market trading on Tuesday.