Leveraged ETFs and Figma's IPO: A High-Volatility Play for Tech Optimists?

The recent initial public offering (IPO) of Figma, the design software unicorn, has ignited a frenzy among investors, with its stock surging 255% above the $33 offering price. This explosive performance has drawn comparisons to the dot-com boom, but with a modern twist: the rise of leveraged ETFs as tools to amplify gains—or deepen losses—in high-growth tech stocks. As the market grapples with Figma's valuation and the risks of its overpriced optimism, the question arises: Can leveraged ETFs offer a strategic edge, or do they merely magnify the volatility inherent in such speculative plays?

The Figma Phenomenon: A New Benchmark for Tech IPOs

Figma's IPO in July 2025 was a masterclass in market timing. The company's stock closed at $115.50 on its first day, valuing it at $59 billion—a valuation that far exceeded Adobe's abandoned $20 billion acquisition bid in 2022. This success was fueled by Figma's robust financials: 46% year-over-year revenue growth, 91% gross margins, and a 130% net-dollar retention rate. Yet, the company's price-to-sales (P/S) ratio of 69—well above Microsoft's 14.1 and Datadog's 17.8—raises red flags. Analysts warn that such valuations are fragile, hinging on the company's ability to consistently exceed earnings expectations and innovate in a crowded market.

The IPO's underpricing—leaving $48.7 billion on the table—was a windfall for institutional investors, who snapped up shares at $33 and sold them at $90+ in the opening days. Meanwhile, retail investors and smaller players were left watching from the sidelines. This disparity underscores the structural advantages of institutional access, but it also highlights the broader appeal of Figma's story: a design platform now used by 95% of Fortune 500 companies, with a product ecosystem expanding into AI-driven tools for developers.

Leveraged ETFs: The Double-Edged Sword of Volatility

Enter leveraged ETFs, which promise amplified returns but come with significant caveats. In 2025, products like Direxion's 3x Semiconductor ETF (SOXL) and ProShares UltraPro QQQ (TQQQ) have attracted billions in inflows, riding the AI and tech momentum. Now, T Rex's proposed 2x Figma ETF aims to capitalize on the stock's volatility, offering twice the daily return of Figma's underlying price. For traders with a high-risk appetite, this could be a way to leverage Figma's upward trajectory without owning the stock outright.

However, leveraged ETFs are inherently complex. They rely on derivatives like swaps and futures, which require daily rebalancing to maintain leverage ratios. This process creates a compounding effect that can erode returns over time, especially in volatile markets. For example, if Figma's stock swings between 10% gains and 10% losses in a single day, a 2x ETF would theoretically rise 20% and fall 20%, resulting in a net loss. Morningstar's analysis of 2025 leveraged ETFs reveals that nearly half underperformed their benchmarks, a sobering reminder of the risks involved.

Strategic Value or Speculative Gamble?

For tech optimists, the 2x Figma ETF could offer a way to participate in the company's growth without the capital required to buy shares outright. Figma's AI investments and expansion into developer tools suggest a long-term growth story, but its valuation leaves little room for error. If the company's revenue growth slows or competition from rivals like Canva and Adobe intensifies, the stock could face a sharp correction.

Moreover, the lockup period for early investors—ending in January 2026—poses a liquidity risk. When these stakeholders begin selling their shares, the increased supply could pressure the stock price. A leveraged ETF would exacerbate this volatility, potentially leading to rapid declines.

Investment Advice: Proceed with Caution

While leveraged ETFs can generate outsized returns in the short term, they are not suitable for most investors. The high fees (typically 100 basis points), compounding drag, and daily rebalancing make them ideal for active traders with a deep understanding of market mechanics. For long-term investors, Figma's fundamentals—its strong margins, enterprise adoption, and AI integration—justify its valuation, but the risks of overpaying for growth remain.

For those considering the 2x Figma ETF, a disciplined approach is essential. Set strict stop-loss limits, monitor daily rebalancing effects, and avoid holding the ETF for extended periods. Options strategies, such as straddles or iron condors, could also be used to hedge against volatility. Most importantly, ensure that such bets form a small portion of a diversified portfolio, as the risks of a single high-growth stock—or its leveraged counterpart—can quickly outweigh the rewards.

Conclusion

Figma's IPO and the proposed 2x ETF highlight the allure of high-growth tech stocks in a post-pandemic market. Yet, the interplay between valuation, volatility, and leverage demands careful scrutiny. For the bold, the 2x Figma ETF offers a way to ride the wave of innovation—but for the prudent, it serves as a cautionary tale. In the end, the most enduring investments are those that balance ambition with prudence, recognizing that not every moonshot needs a rocket.