Why Figma Stock Popped Today
Key Points
Comments from JPMorgan Chase and Goldman Sachs said the software sell-off was overdone.
Figma has plunged in recent weeks in part on concerns about AI disruption.
The stock is likely to move significantly following its earnings report next Wednesday.
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Shares of Figma (NYSE: FIG) were moving higher today, recovering after a brutal sell-off across the software sector that hit the design-software specialist particularly hard.
There was no company-specific news out on Figma, but some Wall Street titans pushed back on the software rout, and that seemed to be enough to trigger the rebound in Figma.
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As of 12:27 p.m. ET, the stock was up 13.1% on the wave of bullishness.
Image source: Figma.
Is the software sell-off overdone?
This morning, JPMorgan Chase put out a note saying that the plunge in software stocks is an opportunity, rather than a warning, and encouraged investors to buy higher-quality software stocks that are resistant to AI, citing Microsoft and CrowdStrike among its picks.
Also, this morning, Goldman Sachs CEO David Solomon said that the software sell-off was "overdone" and "too broad."
Those calls helped lift software stocks for the third day in a row, including Figma. Figma might not be the kind of rock-solid stock that Microsoft or CrowdStrike are, but the stock has plunged so low, down more than 85% at one point, that investors seem to see it as a buying opportunity.
What's next for Figma
As a design software company, there are some real questions about whether AI tools could be disruptive, though there is no evidence so far that Figma is being disrupted by new products like Claude Cowork.
Figma has had a pair of earnings reports since it went public last July, and it delivered strong results both times. The company will report fourth-quarter earnings on Feb. 18, and the stock is likely to swing following the news. Analysts are expecting $293.2 million in revenue and adjusted earnings per share of $0.06. Investors are likely to parse the report closely for any details on the impact of AI competition, which could be as meaningful as the numbers themselves.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Jeremy Bowman has positions in CrowdStrike and Figma. The Motley Fool has positions in and recommends CrowdStrike, Figma, JPMorgan Chase, and Microsoft. The Motley Fool has a disclosure policy.
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