Where Will Figma Be in 5 Years?

by

The initial optimism around Figma (FIG 1.55%) stock has given way to disappointment. In late July, it launched what initially looked like a successful IPO. However, optimism gave way to disappointment as the stock steadily slid after an initial bump. Today, the stock is down more than 25% from its IPO price of $33 per share.

Fortunately, a lot can change in five years. Thus, long-term investors can probably shrug off its recent performance, given the high probability of earning long-term gains over the next five years. Here’s why.

The state of Figma stock

Figma’s cloud-based, collaborative design tools have attracted interest from customers and investors alike. Adobe attempted to buy the company, but its efforts to unseat Figma after abandoning the proposed merger have not succeeded. Knowing that, one can see why Figma stock debuted with a high degree of optimism.

So what happened?

Investors might be concerned about the company’s recent financial performance. While revenue increased by 41% – reaching $752 million – in the first nine months of 2025 compared to the same period last year, it may not be enough to satisfy some.

The company’s costs were much higher than its income. As a result, its losses increased to just over $1 billion during the first three quarters of 2025, up from $830 million in the same period last year, even though revenue was higher.

Figma is currently experiencing financial losses, so it doesn’t have a price-to-earnings (P/E) ratio. Its price-to-sales (P/S) ratio is 12. Currently, there’s nothing on the horizon that suggests the stock price will improve anytime soon.

Loading widget...

Why a long-term turnaround may be in sight

Despite recent challenges, Figma’s increasing revenue indicates it’s a growing company. With a forward price-to-sales ratio of 9, the stock now appears more fairly valued. If this trend continues, Figma could be poised for a recovery.

When Figma first went public, the company estimated a potential market of $33 billion in yearly revenue. With a projected revenue of $1.05 billion for 2025, it seems Figma has only begun to realize its full growth possibilities.

Bloomberg predicts that typical companies in the S&P 500 will see revenue increase by about 5.6% in 2025. Figma, however, is growing much faster than that.

Despite continuing losses, Figma produced a strong $204 million in free cash flow during the first nine months of 2025. A significant portion of the overall loss – about $1.1 billion – was due to stock-based compensation. This indicates Figma is generating enough cash to operate sustainably, which should ease concerns about the net losses.

Figma in five years

Despite recent declines in its stock price, Figma is expected to perform well and deliver strong returns to investors over the next five years due to its continued and fast expansion.

The stock price is still falling, and while revenue is up, the growing losses might worry investors.

Despite the current losses, strong revenue growth and a focus on capturing a large $33 billion market suggest the company is moving in the right direction. Additionally, offering stock as compensation could lessen worries about the financial setbacks.

Falling stock prices and recent gains are pushing the price-to-sales ratio down. This decline may signal that the stock is about to rebound, and given its strong revenue growth, it has a good chance of performing better than the market over the next five years.

Read More

2026-02-06 10:15