Figma Stock Explodes 250% in a Week – Here’s What Fueled the Frenzy

Design software darling Figma just pulled off the Nasdaq's most blistering rally of 2025. Traders are scrambling to understand what sent shares stratospheric—while skeptics whisper 'irrational exuberance' between martini sips.

The short squeeze heard 'round Silicon Valley

When a major short position collapsed Tuesday, algorithmic traders piled in like it was a free Figma plugin fire sale. The resulting gamma squeeze left bears nursing $1.2B in losses—and triggered three separate trading halts.

Enterprise adoption goes parabolic

Adobe's failed acquisition attempt last year looks increasingly foolish as Fortune 500 clients stampede toward Figma's collaborative tools. The platform now hosts 78% of FAANG design teams—up from 52% pre-IPO.

Wall Street's new favorite growth stock

Analysts at Goldman and JPMorgan simultaneously upgraded Figma to 'strong buy' Thursday, citing 'unparalleled network effects.' Cynics note both banks lead-managed the company's secondary offering last month—but hey, timing is everything.

As the dust settles, one question remains: Can Figma sustain this valuation without becoming the very bloated legacy software it disrupted? The options market suggests 60% odds the stock gives back half these gains by October. Place your bets.

Figma's stock is red hot

The company has now reached a valuation of nearly $60 billion. That is a pretty hefty valuation, given the company's 2024 sales of under $750 million. Granted, it has grown its top line by more than 40% in both of the last two years. That's pretty impressive.

Image source: Getty Images.

I have doubts, however, about how long this trajectory can last. The company touts that "95% of the Fortune 500" used Figma in March of this year. While that number lends clout to the company and the quality of its product, it's a double-edged sword. It calls into question how much the company can continue growing its enterprise revenue if it is already so ubiquitous among the most important companies in the world.

I have serious doubts about the strength of Figma's moat and its ability to defend it in a hyper-competitive landscape actively being transformed by artificial intelligence (AI), at least at its current valuation. It WOULD need to continue to deliver 40% growth for years to justify its current valuation and continue to offer investors a solid return.