Why Figma Stock Lost 52% in the First Half of 2026

Shares of Figma (NYSE: FIG) fell 51.6% in the first half of 2026, according to data from S&P Global Market Intelligence.

The collaborative design platform posted excellent financial results, but investors spent the first half of the year worrying about what AI might do to the business.

Great quarter, rough six months

Figma's Q1 2026 report in mid-May was impressive by most measures. Revenue rose 46% year over year to $333.4 million. Non-GAAP earnings per share came in at $0.10, nearly doubling the $0.06 consensus estimate. Net dollar retention hit 139%, the highest level in over two years. Management raised full-year revenue guidance by $55 million.

The stock jumped 10% after hours on the news. But the relief was short-lived. June happened, and shares lost 29% in a single month.

The culprit? Fear of AI-native competition, particularly Anthropic's Claude Design. The fear is that generative AI could commoditize design work, making Figma's collaborative platform less essential over time. It's a legitimate question, but one that Figma's actual results haven't validated yet.

Management is working to integrate AI features and monetize them through credit-based pricing, but investors remain skeptical.

Image source: The Motley Fool.

Figma started charging for AI credits in mid-March. Early signs were positive: over 75% of enterprise users who hit their limits kept paying for more. Teams buying AI add-ons spend more than three times as much annually as those who don't. CEO Dylan Field has emphasized that Figma's multiplayer canvas and deep product context give it advantages that AI-only tools can't easily replicate.

But the narrative around potential AI disruption proved more powerful than the numbers.

Activist investor Findell Capital piled on in late May, calling the stock "significantly undervalued" and urging management to examine its relationship with Anthropic. A securities law investigation announced in March added to the noise. None of this helped the stock find its footing.

Not cheap, but worth a premium price

Figma's stock isn't cheap. Trading at 47 times free cash flow and 62 times forward earnings, the valuation still soars in the stratosphere even after the recent price drops.

But that's typical for a company growing revenue at 46% year over year with improving profitability. The company has $1.6 billion in cash and nearly 690,000 paid customers with strong upsell dynamics. Switching costs are real, whether you're moving to other collaborative design platforms or to newfangled AI prompts.

Think of Figma as an AI-fueled Adobe (NASDAQ: ADBE) for teams. The product is embedded in enterprise workflows. AI-native tools might erode that moat over time, but the revolution won't be quick. Can Figma stay ahead by building AI into its own platform?

It's probably not the time to back up the truck and load up on Figma stock. But this innovative growth story is worth keeping on the watch list. Q2 earnings in August should offer more clarity on whether the AI threat is real or overblown.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe and Figma. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.