FIG

Figma ($FIG) 250% IPO Surge Turns to 70% Plunge Amid $320M Insider Selling Shock

08/06/2025 00:18

Cloud-based design platform Figma ($FIG) is delivering a painful lesson to investors just days after its spectacular IPO debut. The company's stock, which stunned the market with a 250% surge on July 31st at the New York Stock Exchange, has plummeted over 70% in early August, inflicting heavy losses on both IPO investors and short-term traders. Figma is renowned for its real-time collaborative UI/UX design tools. After Adobe's $20 billion acquisition offer was blocked by regulators, the company chose to go public independently. Founded in 2012, Figma provides a platform enabling real-time collaboration between designers and developers through browser-based design tools, offering various products including Figma Design, Dev Mode, and FigJam. With the surge in remote work, demand for collaborative design tools has skyrocketed, driving the company to achieve $821 million in annual revenue with 46% quarterly growth. The problem emerged from massive insider selling immediately after the IPO. According to filings dated August 1st, key executives including CEO Dylan Field and early investors simultaneously sold $320 million worth of shares. Dylan Field disposed of 2.35 million shares (approximately $74 million) while major shareholder Greylock XIV sold 3.07 million shares (approximately $97 million), both at $31.52 per share. This selling occurred even below the IPO price of $33, shocking the market. Interestingly, some directors made small purchases while selling. Director Andrew Reed bought 60,000 shares at $33 while simultaneously selling 1.7 million shares, revealing contradictory trading patterns that suggest even insiders lack conviction about the company's fair value. The stock chart reveals Figma's roller-coaster journey more vividly. After surging 250% from the IPO price of $33 to $115.50 on July 31st, it reached $122 on August 1st. However, following insider selling news, it plunged to $88.6 on August 4th and is currently trading around $80. This represents a 35% decline from its peak, though still maintaining over 140% premium to the IPO price. From a financial perspective, Figma faces a dilemma between growth and profitability. With annual revenue of $821 million growing 46% year-over-year, the company has solidified its position in the cloud design tools market. However, it still records annual net losses of $701 million, lacking profitability. Nevertheless, positive operating cash flow of $54 million demonstrates solid cash generation capability from core operations. Additionally, $1.54 billion in cash reserves minimizes short-term liquidity risks. Investors should particularly note Figma's valuation. At current prices, the P/S ratio reaches 52.6x, significantly exceeding the software industry average of 10-15x. This indicates very high market expectations for Figma's future growth, but also suggests substantial downside pressure if growth slows or profitability improvement delays. Looking ahead, AI integration appears to be a key variable. Revolutionary improvements in user experience through AI-powered prototyping tools like Figma Make could further solidify competitive advantages. Enterprise customer expansion and developer ecosystem building through Dev Mode are also expected to drive growth. However, risk factors are substantial. Incumbents like Adobe and Salesforce are intensifying their counterattacks, and macroeconomic slowdown could reduce corporate IT spending. Given current high valuations, failure to meet market expectations could result in extreme stock volatility. Short-term challenges include absorbing insider selling volume and potential additional selling pressure from post-IPO lockup releases. However, long-term prospects benefit from structural growth in collaborative design tools market and AI technology integration megatrends. Ultimately, Figma investment represents a typical case where opportunities and risks of high-growth tech startups coexist. While innovative products and solid growth are clear strengths, high valuations without profitability present considerable risk factors. Investors need risk tolerance for short-term volatility while closely monitoring quarterly results and profitability improvement roadmaps.