Figma software affected by sell-off rises on strong report. Is the apocalypse coming to an end?

Figma, one of the main triumphants of the IPO market last year in the U.S., has turned into a company whose capitalization has collapsed almost fivefold since going public. However, the report of the design software developer, published after the close of trading on February 18, according to the analyst, can reverse the situation and give investors faith in the end of the "software apocalypse".

Figma's revenue in the final quarter of 2025 jumped 40% year-over-year to $303.8 million, beating the consensus estimate ($293 million), Barron's points out. The company's adjusted earnings of $0.08 per share also beat market estimates ($0.07). In addition, Figma's sales forecasts for the current quarter and all of 2026 were above Wall Street's expectations, Barron's states.

Figma CFO Pravir Melwani told Barron's that the number of users of the paid version of Figma's AI service Figma Make (an embedded tool that allows you to create working prototypes of websites and apps) is growing among large enterprise customers. "There is strong momentum in the enterprise segment," he said. - It shows that our business is accelerating in the AI era."

Figma's quarterly report encouraged investors: at the post-market on February 18 in New York, the shares added more than 15%. On February 19, the growth of quotations accelerated to 16% at the over-the-counter trades in the USA.

Figma's financial results and optimistic outlook "should help allay fears" that new AI-powered software development tools will disrupt the business models of traditional software vendors, Bloomberg Intelligence analyst Anurag Rana wrote. According to Fortune magazine, the "software apocalypse" has already wiped out about $1 trillion in capitalization, including more than $285 billion in February. Among the victims are both Figma itself and its partner in the failed takeover of Adobe, whose shares have collapsed by more than a quarter this year.

As with other players in the software sector, investors are concerned about the sustainability of Figma's competitive advantages, said Piper Sandler analyst Billy Fitzsimmons. According to him, the market is trying to assess two key risks: whether the company will be able to resist the services originally built on the basis of artificial intelligence, and whether the introduction of AI in Figma's own products will not lead to a decline in sales - the more their productivity will grow, the less paid licenses will be required by corporate customers, writes Bloomberg.

After Figma's high-profile IPO in July 2025, its shares jumped 250% on the first day. However, since then, the company's capitalization has collapsed almost fivefold. But doubts remain on Wall Street about the stock's recovery: Figma's securities still look expensive, trading at a multiple of nearly 90 to expected annual earnings, Barron's notes. Figma also faces stiff competition from Canva, a startup that could go public before the end of the year.

According to FactSet, only three out of ten analysts who cover Figma recommend Buy on the stock. Six of them gave them a "Hold" rating (Hold), one - a "Sell" rating (Sell). The average target price of $34.6 per share calculated by the service implies a potential upside of 43% to the closing price of $24.2 on February 18.

This article was AI-translated and verified by a human editor