Figma’s IPO Frenzy: Tech Darling or Overhyped Bubble?

Figma's stock market debut has Wall Street buzzing—but is the design giant really worth the hype?

The valuation question no one's asking

While analysts drool over Figma's growth metrics, the elephant in the room remains: Can any SaaS company justify this level of froth in 2025's cooling tech market?

Design tools don't print money

Even with 80% of Fortune 500 teams using its platform, Figma's path to profitability looks murkier than a startup's pitch deck. Meanwhile, institutional investors keep throwing monopoly money at the problem.

The cynical take

Another day, another tech IPO where 'disruptive potential' gets confused with 'actual revenue.' At least the champagne flows while the bubble lasts.

The right ingredients to make a big splash

As I mentioned above, large IPOs likeandhave performed tremendously well. It could perhaps be due to a lack of IPOs in recent years or exuberance around the crypto and artificial intelligence sectors. IPOs that can show big growth and some semblance of profitability have been met with high praise and excitement.

Image source: Getty Images.

And that's exactly what Figma offered. Between the first quarter of 2023 and the second quarter of 2025, Figma generated average quarterly revenue growth of 10%. In the second quarter of 2025, Figma grew revenue 41% year over year, and is now on pace for $1 billion in annual revenue. The company also achieved decent profitability in the fourth quarter of 2024 and the first quarter of 2025. In its preliminary second-quarter results, management projected $9 million to $12 million in operating profits.

At Figma's initial projected valuation of $13.6 billion to $16.5 billion, that didn't look so bad in today's environment. Plus, Figma has an AI angle. The company is essentially the Google Sheets of design and user interface, allowing designers and coders to collaboratively build an array of projects with high-quality graphics. In 2023, Figma released Dev Mode, which easily translates designs into code. Other AI features on Figma include the ability to automate many tasks and First Draft, an AI tool that allows users to transition from a blank canvas to user interfaces that can be edited with a simple prompt.

Figma already counts 95% of Fortune 500 companies as clients. Management also sees huge potential to incorporate more AI tools and capture business from the 1 billion new applications that are expected to be made by 2028.

Fact or Fiction: Figma should trade close to a $60 billion market cap?

At this valuation, Figma trades somewhere in the range of over 44 times 2025 revenue, assuming the company keeps growing quarterly revenue at a 10% rate. That is an extremely expensive valuation. If investors do view Figma as an AI play or a monopoly in the space, that could lead to a higher premium valuation.

However, there's no certainty that Figma will hold this position forever because AI is clearly going to have a big use-case in design and coding. After all, OpenAI's ChatGPT already demonstrated some pretty impressive capabilities in this regard. Recently on CNBC, Figma co-founder and CEO Dylan Field said that superintelligence is not likely to replace Figma's graphics engine or technology.

"I think that's not stuff that you can learn from looking at code and sort of various places on the internet," said Field. "It's not part of the pretraining data mix. I believe that doing that at scale -- it's quite difficult."

However, it's really tough to know how far AI and superintelligence can go. Figma will also likely need to invest heavily in AI. I certainly think Figma has strong potential, and I did expect the stock to jump out of the gate. But at this kind of valuation, the stock has run too far, too fast. The risk-reward proposition is no longer favorable, which is why I think investors should wait for dips before buying.