Down Nearly 80%, Should You Buy Figma (FIG) Stock Right Now?

Figma (NYSE: FIG), a provider of cloud-based user interface (UI) and user experience (UX) design tools, attracted significant attention when it went public at $33 per share on July 31, 2025. Its stock opened at $85 and closed at a record high of $142.92 just two days later.

Figma initially impressed the bulls because it was growing like a weed and seemed poised to loosen Adobe's (NASDAQ: ADBE) grip on the UI/UX design market. However, that enthusiasm waned over the past year as its growth slowed and expenses rose.

That's why Figma's stock now trades slightly below its IPO price at $32. Does that near-80% drop from its all-time highs represent a good buying opportunity for long-term investors?

Image source: Getty Images.

Why is Figma a disruptive tech company?

Figma's tools allow designers to create scalable graphics, UI elements like buttons, convert static designs into animations, and access third-party apps via plugins. Its clients use its tools to build websites, mobile apps, and interactive product prototypes.

Figma challenges Adobe with cloud-native UI/UX tools that can be run directly in a web browser. By comparison, Adobe's UI/UX tools still need to be installed as desktop applications before they can be synchronized across its Creative Cloud platform. Figma also added real-time collaboration tools -- which enabled multiple users to collaborate on a single project on the cloud -- long before Adobe and other older software design companies integrated those features.

Figma operates a freemium business model. It offers a free tier for individuals and small teams, and a subscription-based tier for professional developers and larger businesses. In 2024, its number of customers that generated at least $10,000 in annual recurring revenue (ARR) grew 45% to 10,517. Its number of customers that generated more than $100,000 in ARR also rose 53% to 963 -- suggesting its forward-thinking, flexible, and cloud-native approach was freeing many software designers from Adobe's sticky subscription model.

Why did Figma's stock drop below its IPO price?

At its peak, Figma's market cap reached $60 billion -- or 57 times its 2025 revenue. That meme stock valuation became unsustainable in this wobbly market.

In 2024, Figma's revenue soared 48% to $749 million, but its gross margin dipped from 91% to 88% as it posted a net loss of $732 million -- compared with a net profit of $738 million in 2023. It attributed that steep loss to one-time stock-based compensation expenses -- mainly from Adobe's aborted acquisition and a release of its restricted stock units (RSUs) -- but all of that red ink made its stock even less appealing as interest rates stayed elevated.

In the first nine months of 2025, Figma's revenue rose 41% year over year to $752 million. However, its gross margin dropped from 87% to 83%, while its net loss widened to $1.02 billion. It continued racking up high stock-based compensation expenses related to its released RSUs. At the same time, the company's increased investments in its own AI infrastructure, AI-powered features, and new tools -- including Figma Make, Draw, Sites, and Buzz -- exacerbated that pressure.

What will happen to Figma over the next two years?

On the bright side, Figma continued to gain more high-value customers throughout 2025. By the end of the third quarter, it was serving 12,910 customers with an ARR of more than $10,000, as well as 1,262 customers with an ARR of over $100,000.

Figma also continued to expand its ecosystem through smaller acquisitions, dozens of new features, and a partnership with OpenAI that integrates its app directly into ChatGPT. Its net dollar retention rate (for customers with at least $10,000 in ARR) reached 131% in the third quarter -- up from 129% in the second quarter (but still down from 134% at the end of 2024).

For 2025, analysts expect Figma's revenue to rise 40% to $1.05 billion as its net loss widens to $1.19 billion. From 2025 to 2027, they expect its revenue to grow at a CAGR of 21% to $1.53 billion as it narrows its net loss to $421 million by the final year.

Yet with a market cap of $16 billion, Figma still doesn't look like a bargain at 12 times this year's sales. Adobe -- which is larger, growing more slowly, but firmly profitable -- trades at five times this year's sales. Therefore, Figma might still be worth nibbling on as a speculative growth play, but I wouldn't build a larger position unless its valuation cools and it stabilizes its margins.

Leo Sun 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.