• Investors may be wondering whether Figma's share price still reflects its current value, or if the recent moves have already priced in the main elements of the story.
• Figma's stock last closed at US$22.92, with a 10.9% move over the past week and 21.1% over the past month, while year to date the share price is down 39.1%.
• Recent coverage has focused on Figma as a listed design software company and on how investors are reassessing growth oriented stocks that sit at the intersection of design and collaboration. This context helps explain why the stock has been more volatile recently as the market reacts to shifting sentiment around these themes.
• On Simply Wall St's valuation model, Figma currently scores 2 out of 6. The next step is a closer look at the main valuation approaches used to assess the stock and why some investors rely on an additional framework that can tie all of those methods together by the end of this article.

Figma scores just 2/6 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 model projects a company's future cash flows and then discounts them back to today's dollars, aiming to estimate what the business could be worth right now based on those projections.

For Figma, the model used is a 2 Stage Free Cash Flow to Equity approach. The last twelve months Free Cash Flow is reported at about $235.1 million. Analyst estimates then map out Free Cash Flow over the next decade, starting at $154.8 million in 2026 and rising through a sequence of projections that reach $1,177.4 million by 2035, with later years extrapolated by Simply Wall St once analyst coverage ends.

After discounting these projected cash flows, the model arrives at an estimated intrinsic value of about $28.07 per share. Compared with the recent share price of $22.92, this implies an 18.3% discount, which indicates the stock appears undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Figma is undervalued by 18.3%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Figma Price vs Sales

For a growing software company that is still building toward consistent profitability, the P/S ratio is often more informative than earnings based metrics, because revenue is less affected by near term investment in product and growth.

In general, higher growth expectations and lower perceived risk can justify a higher “normal” or “fair” P/S multiple, while slower expected growth or higher risk tends to line up with a lower ratio. That is why comparing any single stock to broad averages only tells part of the story.

Figma currently trades on a P/S ratio of 10.40x. The wider Software industry average is 3.53x, while the peer group used here sits at 13.24x. Simply Wall St’s “Fair Ratio” for Figma is 9.57x, which is a proprietary estimate of the P/S multiple that might be appropriate given factors such as the company’s earnings profile, profit margins, industry, market value and key risks.

This Fair Ratio can be more informative than a simple peer or industry comparison, because it adjusts for company specific characteristics rather than assuming all software stocks deserve the same multiple. Against this 9.57x Fair Ratio, Figma’s current 10.40x P/S suggests the stock screens as slightly overvalued on this measure.

Result: OVERVALUED

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 are introduced here as simple stories that you create about Figma, where you link your view of its products, AI bets, competitive risks and growth potential to a set of revenue, margin and P/E assumptions. These then flow through to a Fair Value that you can compare with the current price on Simply Wall St’s Community page, update automatically as new news or earnings arrive, and see side by side with other investors’ views, such as a more cautious narrative with a Fair Value of about US$18.79 and a more optimistic one around US$92.12. This helps you decide where your own view fits on that spectrum.

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

Fair value: US$65.25

Implied discount to this fair value vs the last close of US$22.92: about 64.9%.

Revenue growth assumption: 21.2%.

• Analysts model Figma scaling to US$1.7b of revenue and US$214.1m of earnings by 2028, with profit margins converging toward the wider US software industry over time.
• To line up with the US$65.25 target, this narrative assumes the stock trades on a very high future P/E of 236.2x, well above the current US software industry P/E of 31.9x.
• The view relies on Figma maintaining strong revenue growth, expanding margins and managing share count growth. Investors are encouraged to stress test these assumptions against their own expectations.

Fair value: US$18.79

Implied premium to this fair value vs the last close of US$22.92: about 22.0%.

Revenue growth assumption: 30.0%.

• The narrative sees Figma as deeply embedded in product teams, but argues that the current market expectations already bake in around 20% to 25% annual revenue growth, net margins moving toward roughly mid teens, and a future P/E in the 30x to 40x range.
• It highlights competition from Adobe, Canva, Webflow and AI native tools, with the key question being whether Figma can convert AI and its collaboration stack into earnings fast enough to justify a premium valuation.
• Under this view the stock is priced for solid execution rather than a bargain. Any shortfall in growth or margins could lead to a tighter multiple and pressure on returns.

If you want to see how these stories are built in full, including all the underlying assumptions, risks and fair value paths, you can jump straight into the community narrative pages for Figma, compare different viewpoints side by side and then decide which set of assumptions is closest to your own.

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.