Figma’s (FIG) July 31 IPO was one of the hottest debuts in years. Priced at $33 per share, the design-software firm soared 250% on day one, closing at $117 with a $46 billion valuation.
But the shine has worn off fast. On Thursday, FIG stock plunged nearly 20% to $54.56, their lowest level since going public. The company has now shed half its value.
The drop followed Figma’s first earnings report as a public company. Revenue jumped 41% year over year to $249.6 million, slightly above analyst estimates, but guidance signaled slowing growth: a projected 33% increase this quarter and 37% for the year.
That deceleration spooked investors already wary of its sky-high valuation.
Analyst enthusiasm cools
Wall Street is still largely bullish on Figma’s long-term narrative, but price targets are coming down.
- BofA Securities cut its target from $85 to $69 while keeping a Neutral rating. Analysts noted that while Figma is “well positioned to continue gaining share” in the $36 billion digital design market, the stock trades at 26x expected 2026 revenue, which is simply too expensive
- Wells Fargo’s Michael Turrin trimmed his target from $82 to $70, holding at Equal-Weight.
- RBC’s Rishi Jaluria lowered his view from $75 to $65, also Sector Perform.
- Morgan Stanley’s Elizabeth Porter cut her target from $80 to $70, warning that slower growth, margin pressure, and lofty valuation limit near-term upside
In short, optimism about Figma’s AI edge hasn’t offset concerns about its slowing growth.
The IPO debate
Figma’s roller-coaster debut has also reignited criticism of the IPO process itself.
Venture capitalist Bill Gurley blasted the structure in a series of posts, calling Figma’s 250% “pop” another example of “gross inefficiency.”
“When an IPO is deliberately underpriced, the company sells its shares for less than the market is willing to pay,” Gurley argued. “Who benefits? The large clients of the investment banks… They bought it at $33 last night and can sell it today for over $90.”
It’s not just Figma. Circle Internet Group (CRCL), the firm behind USDC stablecoin, soared 168% on its June debut, closing at $117.49 with a market cap near $30 billion. Like Figma, demand was vastly oversubscribed, raising questions about whether bankers are deliberately leaving money on the table.
For Figma employees, the timing stings. Following Thursday’s lockup expiration, non-executive staff were allowed to sell up to 25% of their shares, just as the stock touched fresh lows.
The takeaway here is that day-one IPO winners aren’t always long-term winners. For investors chasing the initial “pop,” the hangover can come fast.
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