The long awaited design platform Figma’s debut on the NYSE earlier this month was initially a market success story, before turning into a concern just days later. Priced at US$ 33 per share, the collaborative design software company surged as much as 36% in early trading, valuing the firm at nearly US$ 21 billion. The IPO, led by Goldman Sachs and Morgan Stanley, marked one of the largest tech flotations of the year.
But the glow didn’t last long. By the end of its first full week of trading, Figma’s shares had fallen 14% from their peak. The drop erased roughly US$ 3 billion in market value. Analysts cited valuation concerns, since the company was trading at over 20 times forward sales on debut, and a cooling appetite for newly listed tech names after a string of volatile performances and macroeconomic concerns.
The timing of Figma’s listing was notable. US equities have been in a fragile rally this summer, with the S&P 500 oscillating near record highs, but showing heightened volatility. Recent macro data, including mixed labor market reports and renewed uncertainty over the Fed’s rate-cut trajectory, has kept investor sentiment cautious. While the IPO window has reopened in 2025 after two slow years, the market remains sensitive after all.
Figma’s debut also comes in the shadow of its failed US$ 20 billion acquisition by Adobe, blocked by regulators last year. That collapse put the company back on the growth path as a standalone operation. The IPO prospectus showed revenue growth of 40% YoY, but also widening losses as the company invests heavily in AI features and international expansion, factors that can both excite and worry potential shareholders.
Checking the vibes
Figma’s early performance could set the tone for other tech listings expected in the second half of the year. Strong early trading in recent IPOs can spill over into subsequent debuts, but volatility can have the opposite effect. With names like Stripe and Databricks watching closely to make their own leaps, Figma’s rapid rise and pullback may temper some of the exuberance that briefly returned to the market.
For now, analysts are split. Some argue the pullback is a healthy reset that will let fundamentals drive the stock in the coming quarters. Others warn that the combination of high valuation, competitive pressures from Adobe and Canva, and uncertain macro conditions could keep shares under pressure.
