• If you are trying to figure out whether Figma is attractively priced or just another hyped software name, you are in the right place.
• The stock recently closed at US$26.17, with a 13.6% decline over the last 7 days, an 8.6% gain over the last 30 days, and a 30.4% decline year to date, which may be changing how investors think about its potential and risk.
• Recent coverage has focused on Figma as a listed design platform company and what that means for long term adoption in product and UX teams. This helps frame those sharp short term moves. Investors are weighing how those headlines translate into real business traction and whether the current price fairly reflects that story.
• Right now Figma has a valuation score of 0 out of 6. We will look at what traditional valuation checks say about the stock, then finish with a way of thinking about value that goes beyond any single model.

Figma scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Figma Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company could generate in the future and discounts those amounts back to today, to arrive at an estimate of what the business might be worth now.

For Figma, the model used is a 2 Stage Free Cash Flow to Equity approach, based on Free Cash Flow reported in $. The latest twelve month Free Cash Flow is about $238.3 million. Analysts provide explicit forecasts out to 2029, with projected Free Cash Flow of $466.9 million in that year, and Simply Wall St extrapolates further cash flows through to 2035 using gradually moderating growth assumptions.

When all those projected cash flows are discounted back to today, the model arrives at an estimated intrinsic value of US$21.07 per share. Compared with the recent share price of US$26.17, this implies the stock is about 24.2% overvalued on this DCF view.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Figma may be overvalued by 24.2%. Discover 47 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Figma Price vs Sales

For a company like Figma, where investors often focus on revenue rather than current profits, the P/S ratio can be a useful way to think about what the market is paying for each dollar of sales. Higher growth expectations or lower perceived risk can support a higher P/S, while slower expected growth or higher risk usually suggests a lower, more conservative multiple.

Figma is trading on a P/S of 12.93x. That sits above the broader Software industry average of 3.37x and also above its peer group average of 6.59x. Simply Wall St also provides a proprietary “Fair Ratio” of 9.95x, which is an estimate of what Figma’s P/S might be given factors such as its growth profile, risk characteristics, profit margins, market cap and industry.

This Fair Ratio is more tailored than a straight comparison with peers or the industry because it adjusts for company specific features rather than relying on broad group averages. Compared with the current P/S of 12.93x, the Fair Ratio of 9.95x suggests the shares are trading above what that framework would consider a reasonable level.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Figma Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, simple story driven forecasts on Simply Wall St’s Community page. Here, you and other investors link a view of Figma’s business to specific assumptions about future revenue, earnings, margins and a fair value. You can then compare that fair value with today’s price to decide whether the stock looks attractive or expensive. Each Narrative automatically updates as new earnings or news arrive and, in Figma’s case, ranges from one investor who sees a fair value around US$18.79 per share to another who places it closer to US$92.12, based on different expectations about growth, profitability and risk.

For Figma however we will make it really easy for you with previews of two leading Figma Narratives:

Fair value in this narrative: US$65.25 per share

Implied discount to this fair value versus the recent US$26.17 price: about 59.9% undervalued

Assumed revenue growth: 21.2% a year

• Analysts are tying their view to Figma growing revenue to an estimated US$1.7b by around 2028, with profit margins moving from a current loss to roughly the US software industry average over time.
• To line up with the US$65.25 target, the narrative leans on a future P/E of about 236.2x on forecast 2028 earnings, which is well above the current US software industry P/E of 31.9x.
• This view highlights upside tied to AI native workflows, deeper enterprise adoption and broader creative use cases, but also flags risks around competition, AI monetisation, dilution and exposure to global software spending.

Fair value in this narrative: US$18.79 per share

Implied premium to this fair value versus the recent US$26.17 price: about 39.2% overvalued

Assumed revenue growth: 30% a year

• This narrative treats Figma as a strong product that is already deeply embedded in teams, but suggests the current share price assumes revenue growth closer to 20% to 25% a year and net margins moving toward roughly 15% to 20% over several years.
• On these assumptions, a future P/E of about 35x is used to frame a more cautious fair value of US$18.79, indicating less headroom at today’s price even with healthy execution.
• Key risks in this view include tougher competition from Adobe, Canva and AI native tools, AI potentially commoditising parts of design, and the market treating Figma more like a mature software name if growth or margins fall short.

Together, these two Narratives show how different assumptions about revenue growth, margins and future P/E multiples can point to very different ideas of what Figma is worth right now. They are useful reference points for you to stress test against your own expectations for the business, rather than a script you have to follow.

Do you think there's more to the story for Figma? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.