Figma Stock Is Bleeding — And Google Just Handed It a Knife

When a stock declines without a major cause, a certain kind of silence descends upon it. No scandal, no missed profits, and no disastrous product failure. Investors squint at their screens, wondering what they’re missing, as there’s just a slow, steady decline. Lately, that has been Figma’s world. The company’s actual business is still growing by most honest measures, despite shares closing close to $20, down nearly 9% in a single session, and down over 35% year to date.

When Figma went public in July 2024, there was a lot of excitement. A browser-based workspace that allowed designers, developers, and product managers to collaborate on a project in real time from any location was created by the collaborative design platform. It was one of those products whose logic you could sense right away. Teams that utilized it were more likely to stick around.

Figma’s independence as a significant independent force in enterprise software may have been confirmed when regulators blocked Adobe’s $20 billion acquisition attempt in 2023. It seemed like a beginning with the IPO.

What came next was much more chaotic. This week, Oppenheimer started coverage with a “perform” rating, which is the analytical equivalent of a shrug. It seems that this neutral tone was sufficient to spur sales. Markets are emotional beings disguised as logical entities.

Although a “perform” rating doesn’t say anything drastically bad, it also doesn’t give investors cause for optimism. And FIG needs confidence right now. The fact that shares fell after the note indicates how precarious the current sentiment surrounding this stock is.

The Google news then appeared. Google launched Stitch, an AI-powered design tool that allows users to type a prompt and get a completed design, in beta form on Tuesday. It responds to voice, claims real-time critique capabilities, and is currently free. It’s still genuinely unclear if Stitch emerges as a significant rival or quietly fades into Google’s product graveyard.

Wall Street, however, didn’t wait to learn. On Wednesday, Figma shares fell by an additional 8%, and on Thursday, they fell by more than 4%. Figma is fully paying the AI anxiety tax.

The irony in this situation is difficult to ignore. Figma partially positioned itself as an AI-ready platform when it went public, citing its Figma Make tool, which allows users to create or alter app designs using prompts powered by Anthropic and Google models, as proof that it was ahead of the curve. As recently as October, the business had even announced an expanded collaboration with Google Cloud.

Google’s most recent product is currently being portrayed as an existential threat. It remains to be seen if that framing is true or merely the market’s reaction to any announcement related to AI.

The figures actually reveal a business that is expanding quickly and spending heavily. In 2025, revenue increased by 41% to $1.06 billion. Revenue for the fourth quarter was $303.8 million, significantly exceeding projections. There is $1.65 billion in cash and negative net debt on the balance sheet. These are not the numbers of a failing business. However, these are the figures of a business that is spending money at a rate that would make the majority of CFOs reach for antacids.

Over $1.0 billion was spent on R&D. Compensation based on stocks reached $1.36 billion. The operating margins are currently 122% negative. Investors appear to view those figures as a decision rather than a weakness; the question is how long they are prepared to wait for that decision to pay off.

An additional layer of unease has been introduced by insider selling. Executives, including the CEO, have reportedly reduced their holdings since the lock-up expiration in January released hundreds of millions of shares into the market, according to numerous reports.

People have personal financial plans, diversified portfolios, and mortgages; insider selling does not necessarily indicate anything sinister. However, when combined with everything else, the timing makes it seem louder than it might otherwise. A ceiling on any attempts at recovery is maintained and supply is kept high by early investors continuing to reduce their positions.

The narrative presented by valuation models is genuinely contradictory. Assuming strong growth and margin improvement, one framework sets fair value at $18.79, which is marginally less than current trading prices. The result of a discounted cash flow model is $26.64, indicating actual upside.

The difference between those two figures illustrates the main debate surrounding Figma at the moment: will this business eventually turn its investment phase into long-term profitability, or is the money being spent more quickly than the returns can keep up? The market is priced for consistent performance. Dilution must slow, revenue growth must remain above 25%, and margins must significantly increase over the coming years. That’s a lot of requirements to fulfill at once.

The upcoming April and May earnings reports will be very important. Any indication that revenue growth is beginning to surpass the cost structure, or operating leverage, is what investors are looking for. Expanded enterprise tools and AI design features are being added to the platform as part of ongoing product development.

Figma continues to stand out in a crowded market thanks to its browser-based methodology and developer community. But the competition is better-funded and more aggressive than it was even twelve months ago.

There’s a sense that Figma’s story is far from finished. However, this specific chapter—the post-IPO digestion phase, where early enthusiasm is put to the test and valuation meets reality—is turning out to be more difficult than many had predicted.

The next earnings report might completely change the tone. Additionally, it’s possible that ongoing insider selling and pressure from AI rivals prevent any recovery for longer than bulls would like. As this develops, it seems as though the true story of Figma is still being written. In retrospect, the current price may appear to be either obviously too generous or obviously too cheap.