Figma Stock Pops 250% in Trading Debut

Based on its closing price, Figma’s valuation is $67.6 billion. (Gabby Jones/Bloomberg)

Figma’s initial public offering is the latest proof that the IPO market is still red hot.

Shares sizzled when the Figma stock began trading on Thursday afternoon. The stock nearly tripled when it opened shortly before 2 p.m. and ended the day with a gain of 250%.

Figma, a design software start-up, is the latest company to join the unicorn parade. CoreWeave and Circle Internet Group have wowed Wall Street since going public earlier this year.

Figma, which was forced to scuttle plans to sell itself to Adobe in late 2023 for $20 billion due to regulatory concerns, priced its initial public offering Wednesday. The company sold 36.9 million shares at $33 a share, above the expected range of $30 to $32 a share, raising more than $1.2 billion. Shares opened at $85 and quickly moved higher.

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Figma debuted on the New York Stock Exchange under the ticker symbol FIG. Based on its closing price, Figma’s valuation is $67.6 billion.

Figma had set an initial range of $25 to $28 before boosting it.

The solid debuts for Circle, fintech Chime Financial, and drone maker AIRO were a good sign for Figma’s first day of trading. (CoreWeave stumbled out of the gate in late March but has since nearly tripled from its offering price.)

“Figma’s IPO is a bellwether event for the tech sector,” said Derek Hernandez, senior analyst of emerging technology at PitchBook, in an email to Barron’s. Hernandez described Figma as a “generational” software as a service company “that has achieved a near-monopolistic hold on the product design market.”

Figma’s high-profile backers represent a Who’s Who list of prominent Silicon Valley venture-capital firms, including big investments from Index Ventures, Greylock Partners, Kleiner Perkins Caufield & Byers, and Sequoia Capital.

The IPO is also another sign of strength for large financial firms, which are benefiting from a resurgence in demand for new listings as well as increased merger activity. Morgan Stanley, Goldman Sachs, Allen & Company, and JPMorgan Chase were the lead underwriters for the Figma stock sale.

The numbers are solid, too. Figma’s sales surged 48% to $749 million in 2024. Revenue rose another 46% in the first quarter of this year. But Figma has alternated between profitability and red ink in the past two years, posting net income of $737.8 million in 2023 and a net loss of $732.1 million last year. (Figma’s 2023 profit was inflated by a $1 billion merger termination fee from Adobe.) Figma reported a profit of $44.9 million in the first quarter of this year, however.

Investors may also be intrigued by the fact that Figma, like companies such as MicroStrategy, GameStop, Tesla, and Trump Media & Technology Group, has adopted a Bitcoin investment strategy. With Bitcoin trading around $118,000 and not far from its all-time high, Figma’s crypto investment could give it a further boost.

Figma has a stake in the Bitwise Bitcoin exchange-traded fund that was worth $69.5 million as of March 31, up from its initial investment of $55 million from March 2024. The company also said in regulatory filings that it bought $30 million’s worth of USD Coin, the stablecoin backed by Circle, in May. Figma said that it “intends to re-invest its stablecoin holdings into Bitcoin at a later date.”

Still, even if Figma enjoys a big pop on its opening day, there are big challenges ahead. One analyst noted that the increased use of generative artificial intelligence technology threatens to disrupt the business model for Figma. Worries about AI are one reason Adobe’s stock has struggled lately as well.

“It’s clearly a rock-solid business now, but there may be questions over what impact the advent of AI might have on its future margins,” said Samuel Kerr, head of equity capital markets at Mergermarket, in an email to Barron’s about Figma.

“Are Figma’s numbers solid enough at this stage of the AI lifecycle and its disruptive impact to offset the risk it might pose in the future? That’s the question they will likely be asking themselves when looking at this IPO,” Kerr added.

Investors might look past these concerns for now, though. Figma seems poised to become the next hot Wall Street debut as the IPO market roars back to life.

Write to Paul R. La Monica at paul.lamonica@barrons.com