• For investors wondering whether Figma at around US$19.42 is starting to look like value or still carries more downside risk, this article breaks down what the current price implies.
• Figma’s stock has moved 13.0% over the last 7 days, but is still down 8.7% over 30 days and 48.4% year to date. This raises questions about how the market is reassessing its potential and risks.
• Recent coverage around Figma has focused on its role in design software and the broader interest in software platforms. This gives investors more context on how it fits within the wider software sector. This background matters because sentiment around product adoption, competitive positioning and software spending often affects how investors are willing to price growth stories like Figma.
• On Simply Wall St’s valuation checks, Figma currently has a valuation score of 3 out of 6. The rest of this article will walk through what that means using different valuation methods, then conclude with a way to think about value that goes beyond the usual ratios and models.

Approach 1: Figma Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, estimates what a stock could be worth by projecting the company’s future cash flows and discounting them back to today’s value. It focuses on cash the business can generate for shareholders rather than short term earnings swings.

For Figma, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $238.3 million. Analyst projections and Simply Wall St extrapolations then step this forward, with free cash flow for 2029 projected at $466.9 million and further estimates extending out to 2035, all kept in dollar terms.

When those projected cash flows are discounted back, the DCF model arrives at an estimated intrinsic value of about $26.97 per share. Against a current share price of roughly $19.42, this suggests the stock trades at about a 28.0% discount to that intrinsic estimate, which indicates that Figma appears undervalued on this cash flow view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Figma is undervalued by 28.0%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Figma Price vs Sales

For companies where profitability is still developing, P/S is often a useful cross check because it compares what you are paying to the revenue already in place, rather than earnings that can be affected by investment and accounting choices.

In general, higher growth expectations and lower perceived risk tend to justify a higher “normal” P/S multiple, while slower growth or higher uncertainty usually call for a lower one. That is why it helps to compare the current P/S with a few different benchmarks instead of looking at the number in isolation.

Figma currently trades on a P/S of about 9.7x. This sits above the broader Software industry average of around 3.8x, but below the peer average of roughly 21.1x. Simply Wall St’s proprietary Fair Ratio for Figma is 9.37x, which reflects factors like its growth outlook, profit margins, industry, market cap and company specific risks. Because this Fair Ratio is tailored to Figma, it can be more informative than a simple comparison with peers or the industry, which may have very different profiles. With the actual P/S of 9.7x only slightly above the Fair Ratio, the stock screens as about fairly valued on this measure.

Result: ABOUT RIGHT

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.

Upgrade Your Decision Making: Choose your Figma Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives take your view of Figma’s story, link it directly to assumptions about future revenue, earnings and margins, then convert that into a Fair Value you can compare with the current price. All of this happens inside Simply Wall St’s Community page, where Narratives update automatically as new news or earnings arrive. For example, one Figma Narrative might lean closer to the bullish analyst fair value near US$92 per share, while another sits nearer the bearish view around US$52, giving you a clear sense of which story you personally find more reasonable.

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 vs last close of US$19.42: about 70% below this fair value

Revenue growth assumption: 21.2% a year

• Analysts in this narrative are comfortable with Figma reaching US$1.7b of revenue and earnings of US$214.1m by 2028, with margins moving from a loss today toward the US Software industry average.
• The view supports a very high future P/E of 236.2x on those 2028 earnings, which is well above the current US Software industry P/E of 31.9x.
• It leans on expanding AI products, larger enterprise accounts and multi product adoption, while flagging dilution, AI investment and macro sensitivity as key risks to watch.

Fair value in this narrative: US$18.79 per share

Implied premium vs last close of US$19.42: about 3% above this fair value

Revenue growth assumption: 30.0% a year

• This narrative starts from Figma’s strong product position and deep workflow integration, but treats the stock as already pricing in revenue growth of around 20% to 25% a year and net margins trending toward 15% to 20% with a future P/E of about 30x to 40x.
• It highlights that AI brings both cost pressure and opportunity, with the risk that AI features become commoditised before Figma converts them into lasting pricing power.
• The author sees competition from Adobe, Canva, Webflow and AI native tools, and suggests the market could re rate the stock if growth or margins fall short of what is implied in the current valuation.

If you want to see all the numbers, assumptions and scenarios pulled together in one place, including community bull and bear views and how they translate into fair value ranges, See what the community is saying about Figma.

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.