The plot has thickened for the tumbling Figma stock price as the post IPO freefall accelerated after the company published its earnings report. FIG plunged by 14% to $58, down by over 52% from its all-time high, bringing its market capitalization to below $30 billion.
Figma stock plunges despite strong numbers
Figma is a technology company that aims to disrupt the design industry by focusing on collaboration. It is one of the two companies trying to disrupt a business that Adobe has always dominated. The other one is Canva, the fast-growing Australian company.
Adobe attempted to buy Figma a few years ago in a $20 billion deal, which regulators blocked, forcing it to pay a $1 billion termination fee.
A statement released on Wednesday showed that Figma’s business was doing well. Its revenue rose by 41% in 2 to $250 million as it continued to add more clients to its platform.
The report also showed that the net retention rate for customers with an ARR rose to $10,000, equivalent to 129%. It now has 11,906 customers paying it $10,000 and 1,119 rising to $100,000.
Figma has continued working on new products in the past few months. It launched Figma Sites, allowing users to deign, prototype, and publish websites.
Other recently launched products were Figma Buzz, which allows users to scale without compromising brand consistency. One of its products was used by Coinbase during the recent launch of it Base application. The CEO said:
“We delivered record revenue in Q2 as we continued to innovate with the launch of four new products. Looking ahead, we’re excited to keep building for our customers and help define the next era of digital products and experiences.”
The Figma stock price plunged as the company warned of an early lock-up share release that will allow insiders to sell the shares early. It is common for stocks to plunge before their lock-up expiry days.
Still, the company expects that its business will continue doing well this year. It expects that its third-quarter revenue will be between $263 million and $265 million, equivalent to a 33% growth rate.
READ MORE: Figma hits NYSE today—can FIG stock mirror other hot tech IPOs?
The management also expects the annual revenue will be between $1.021 billion and $1.025 billion, a 37% annual growth rate.
There are signs that the company has become fairly valued based on the Rule of 40 metric. Based on the quarterly results, its revenue growth was 41% and its operating margin was 1%, giving it a multiple of 41%.
Therefore, we expect the ongoing Figma stock price crash to be brief and that the company is well-positioned for long-term growth once the lock-up noise ends.
Its main advantage is that it has a popular product used by thousands of companies, like Netflix, Stripe, The New York Times, Spotify, and HP. It is also growing its revenue and profitability.
Figma stock price technical analysis
Figma stock chart | Source: TradingView
The four-hour timeframe chart shows that the Figma share price has been on a strong freefall in the past few weeks following its IPO. It has plunged from a high of $142 to $54 today.
The stock has moved below all moving averages and is struggling to attract bids. Therefore, the most likely scenario is where the Figma shares remain under pressure for a while and then bounce back later this year as investors focus on its strong revenue growth and valuation.
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