Interface design software company Figma (NYSE:FIG) made a stellar debut on the public markets last week, with its stock now trading at $122 per share, up from its listing price of $33. As we’ve noted in our previous article, there are several good reasons for the optimism, including strong growth, high customer retention, and improving profitability. (Why Figma soared over 3x) But with a market cap now standing at roughly $60 billion, investors may be pricing in perfection. In fact, this marks the biggest first-day gain for a U.S. IPO valued at over $1 billion in nearly 30 years. So what could go wrong from here? Here’s a closer look at the potential risks for Figma stock.
High Valuation and Expectations: Figma posted revenue of $228.2 million in the quarter ended March 31, up 46% year-over-year, putting it on a $913 million annual revenue run rate. At the current market cap of about $60 billion, that translates into a price-to-sales multiple of over 60x, which is far above mature peers like Adobe at about 7.5 times forward sales. This premium reflects high growth expectations (over 40% growth compared to about 10% for Adobe) but also means the company must continually deliver strong performance to justify its valuation. Even a marginal slowdown in growth or profitability could lead to a significant stock price correction.
Competitive Pressure: While Figma’s product is well-loved by customers, with the company seeing strong customer retention and workflow lock-in among design and product teams, its lead is hardly unassailable. Microsoft (NASDAQ:MSFT) is integrating design tools into its widely used Office 365 suite, and this could potentially capture more enterprise users. See Microsoft’s revenue breakdown. Smaller but rapidly expanding players like Canva are broadening their product offerings. Additionally, emerging AI-native tools, including those from companies such as OpenAI, could disrupt traditional design platforms altogether and reduce market share for incumbents like Figma.
Expanding Beyond Core Design Audience: Figma’s long-term success depends on adoption beyond its original base of designers to a broader workplace audience that includes software developers, marketers, and cross-functional teams. Achieving this requires significant product innovation and effective execution. Failure to broaden its user base will limit growth potential and undermine its ambitious valuation. The broader creative software market (which includes design, editing and rendering tools) will reach $15.4 billion in 2025[1]
. On the other hand, the global software market is expected to be over $700 billion in 2025, with enterprise software making up a significant portion.
Enterprise Customer Base Maturity: While Figma has over 13 million users, its large enterprise customers who pay over $100,000 annually total just over 1,000. This could be an indication that its enterprise footprint is still developing. If Figma fails to deepen relationships with high-value clients or accelerate enterprise adoption, it could limit long-term revenue scalability and margin expansion.
Insider Lock-up Expiration and Share Liquidity Risks: Figma’s IPO involved only a limited portion of its total shares being made available for public trading, with approximately two-thirds of shares held by insiders subject to the typical 180-day lock-up agreement. These agreements prevent early investors, employees, and company executives from selling their shares immediately after the listing. Once the lock-up period expires, which is likely around January 2026, insiders will be free to sell their holdings, significantly increasing the supply of shares on the market. If many of these shareholders choose to cash out, there could be downward pressure on Figma’s share price.
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