Figma's Shares Dropped a Significant 39% in August
Figma's Volatile Stock Performance Ahead of First Earnings Report
Figma, the popular design software company, is gearing up to deliver its first report as a publicly traded company after hours today. The journey for Figma has been a rollercoaster ride since its initial public offering (IPO) in July.
Despite the initial surge, the trading volume of Figma's stock faded over the course of the month as it gradually declined. The stock experienced a significant drop on its opening day, going from an IPO price of $33 to closing at $115 a share. However, the stock subsequently jumped again the following day, reaching a peak of $142.92, before pulling back on Aug. 4.
The stock tumbled early in the month and traded mostly flat over the duration of August after the initial fall. Figma's stock finished the month of August down by 39%. IPO buyers took profits on Aug. 4, causing a pullback in Figma's stock price. Despite this pullback, Figma's stock still has a high price-to-sales ratio of 36.
Goldman Sachs expressed skepticism about Figma's valuation, stating limited visibility into its momentum and revenue growth. Wall Street analysts have shifted from initial enthusiasm to skepticism about Figma's valuation after its IPO surge and subsequent nearly 20% stock drop. Concerns focus on whether its $27 billion valuation is sustainable amid slowing growth and high price-to-sales ratios.
However, Figma's future looks bright. The company is growing rapidly, delivering a profit, and has Adobe's stamp of approval, despite Adobe's earlier $20 billion acquisition being blocked. The Wall Street consensus predicts revenue of $248.7 million for Figma, a 40.3% increase from the previous year.
Piper Sandler rated Figma as overweight with a price target of $85, citing its differentiated platform and attractive business model. Despite the recent volatility, Figma's stock is likely to move on the news of its first report as a publicly traded company. The company expects $0.08 in earnings per share.
Figma's stock data is provided by S&P Global Market Intelligence and YCharts. The stock stabilized in the last week of August after a gradual decline. As Figma prepares to release its earnings report, investors will be closely watching to see if the company can maintain its momentum and justify its high valuation.
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