Figma stock performance snapshot

Figma (FIG) has recently drawn investor attention after a period of mixed share performance, including a 10.4% single day decline and a 29.6% gain over the past month, alongside a year to date decline of 35.4%.

At a share price of US$24.29, the stock has swung sharply in recent weeks. It has a 1 month share price return of 29.6%, but a year to date share price return that is down 35.4%. This points to momentum recovering after a weaker stretch as investors reassess growth prospects and risks around the business.

If you are looking beyond Figma, this could be a useful moment to scan other software and AI related opportunities through our screener of 30 AI small caps

With shares at US$24.29, a value score of 1 and the stock trading at a discount to both analyst targets and some intrinsic estimates, you have to ask: is there real upside left or is future growth already priced in?

Most Popular Narrative: 29.3% Overvalued

Figma’s last close at $24.29 sits well above the fair value of $18.79 implied by the most followed narrative, which frames the stock as priced for strong execution rather than a bargain.

If we’re being calm and reasonable about it, the market is basically assuming around 20 to 25% revenue growth per year, net margins improving toward roughly 15 to 20% in five years, and a future P/E of about 30 to 40x once the company is properly profitable. That combination does not scream undervalued, but it also is not bubble territory. It just means the stock is priced for steady execution. If growth stays above 25% or margins push past 20%, there is real upside. If they fall short, the multiple likely tightens.

Want to see what is baked into that fair value gap? The narrative leans on ambitious revenue compounding, margin lift and a premium earnings multiple. The exact mix may surprise you.

Result: Fair Value of $18.79 (OVERVALUED)

However, this hinges on execution. A reported net loss of US$1,401.48m and pressure from large competitors in AI and design tools could quickly challenge that overvaluation story.

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Another view on Figma’s value

While the most popular narrative frames Figma as 29.3% overvalued at $24.29 versus a fair value of $18.79, the SWS DCF model points the other way, with a fair value estimate of $27.92 and the stock trading about 13% below that level. Which storyline do you trust more: the market’s execution premium or the cash flow math?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Figma for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals on value and sentiment, this is a good moment to look through the data yourself and decide how you feel about Figma’s trade off between risks and rewards. For a clearer view of both sides, check out the 3 key rewards and 2 important warning signs.

Looking for more investment ideas?

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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.