Figma is a powerful cloud-based collaborative design tool that will soon be listed on the NYSE under the “FIG” ticker. When formulating an investment strategy, you should consider both the company’s strengths and potential risks.
Consideration of Figma Investment Strategy
Figurema is a leading provider of Software as a Service (SaaS)-based design and collaboration tools, showing solid growth and high profitability. However, as it is a newly listed stock, some key points must be considered before investing.
1. Strengths and Opportunities of Figma
Market Leadership and Strong Ecosystem: Figma has effectively become the industry standard among designers, and real-time collaboration capabilities offer huge benefits, especially in the era of remote work. We have built a strong community and ecosystem that scales with plug-ins and widgets.
High Growth and Profitability: Revenue growth of 48% in 2024, and solid growth of 46% in the first quarter of 2025. In addition, Gross Margin, which is close to 90%, illustrates the strength of SaaS business models. In the first quarter of 2025, it proved profitable with a net profit of $44.9 million.
Solid customer base: 95% of Fortune 500 companies use Figma, and more than 1,000 customers pay more than $100,000 a year, which means a strong corporate customer base.
AI Integration and Innovation: Through integration with AI technology, we are making efforts to make design workflows more efficient. This is an important factor in keeping competitive and securing new growth engines in line with the AI era.
Revenue diversification: In addition to the core design tools, FigureJam, a whiteboard collaboration tool, creates additional revenue streams.
2. Potential risks and challenges
High Valuation: Targets an enterprise value of approximately $18.8 billion based on the listing price range ($30 to $32), a high share price-to-sales ratio (P/S) of approximately 20 times annual sales in 2024. As market expectations are very highly reflected, there is a burden to continue to meet these expectations.
Fierce Competition: There are strong competitors such as Adobe XD, Sketch, Miro, and Canva. After the failure of the acquisition with Adobe, the competition with them may intensify.
Growth Slows Down: High-growth companies tend to see their growth rates slow down naturally over time. The key is how long Figma can maintain its current high growth rate.
Initial IPO Volatility: Newly listed stocks often exhibit large price volatility immediately after listing. Particularly, caution is needed as the volume of profit-taking from existing shareholders may come out.
BTC Investment In Finance: Figma disclosed that it is investing in Bitcoin ETFs in finance, which can be perceived by shareholders as a risk outside the company’s core business.
3. investment strategy
Figma is a company with attractive growth potential, but early IPO investment requires a cautious approach.
Maintain a long-term investment perspective: It is recommended to invest in the company’s long-term growth potential (such as continued market expansion, new product development, and successful AI integration) without being swayed by short-term IPO price volatility. For SaaS companies, indicators such as Turn Rate and Net Dollar Retention are important for predicting long-term growth.
Enter IPO Day One Careful: On or immediately after an IPO, speculative demand may cause the stock to rise excessively. Waiting for initial excitement to subside and market prices to stabilize may be a safer entry point.
Continuous monitoring of financial metrics: quarterly earnings releases after listing should closely analyze sales growth, profitability, cash flow, and customer number growth trends. In particular, it should be supported by continued growth that justifies its high valuation.
Keep an eye on competitors’ trends: Keep an eye on Adobe and other design/collaboration tool competitors’ new service launches, price policy changes, AI technology introduction, and more.
Evaluation of Technology and Product Innovation: We need to keep an eye on how Figma innovates design workflows and creates new markets through new technologies such as AI, not just powerhouses in traditional markets.
Figma is a company with the potential to lead the future of digital design and collaboration. However, it would be a smart investment strategy to fully understand the risks unique to newly listed companies and take a careful long-term approach.
