Hey everyone! Figma just filed their S-1 and I wanted to share my thoughts on what I think the stock might be worth.
Quick company overview: Figma started as a design tool but has grown into a full platform. They now do web development, prototyping, presentations, marketing materials and more. Their main rival is Adobe, but they also compete with companies like Canva, Webflow, Miro, Framer and Sketch. The biggest threat might be AI tools that are getting better at design work.
Key numbers from their filing:
- $821M in revenue (last 12 months) with 46% year over year growth
- 91% gross margins
- 95% of Fortune 500 companies are customers
- 10.5K paying customers spending over $10K annually
- About 552M shares outstanding (including stock options and convertibles)
One thing to note is they haven’t been consistently profitable. They got a $1B breakup fee when Adobe’s acquisition fell through in 2023, but then spent heavily on product development and marketing in 2024.
I’m guessing the IPO will value the company between $15B-$18B, with shares priced around $27-$32. My analysis puts fair value at about $27.50 per share.
My valuation assumptions:
- Revenue growth slows from 46% to risk-free rate over 10 years
- EBIT margins start negative but improve to 30% (matching Adobe)
- Including cash and IPO proceeds (~$1.5B), equity value is ~$15.5B
- Based on 552M shares outstanding
What do you all think? Most IPOs get overpriced so this will probably pop on day one!
Interesting take, but I think you’re underestimating AI competition. I’ve been tracking this space and generative AI is hitting design way faster than people expect. Midjourney and DALL-E are already eating into basic design work, and we’re seeing new AI design tools every quarter. Your 30% EBIT margin feels too aggressive here. Adobe can pull those numbers because they’ve got decades of moat and enterprise lock-in. Figma’s in a much more fluid market. I’d stick closer to 20-25% long-term. That 95% Fortune 500 penetration cuts both ways too. Sure, it sounds great, but where’s the growth gonna come from? They’re maxed out with big customers, so now they’re chasing smaller accounts and international markets - both pay way less. All this puts me closer to $22-24 fair value. Market will probably overpay at first like you said, but the fundamentals don’t support your target.
Your revenue growth assumptions look way too optimistic for this competitive landscape. I work at a mid-size tech company and we’re actively looking at Figma alternatives because of pricing. That $10K+ annual spending threshold you mentioned? It’s crushing budgets, especially with all the economic uncertainty right now. Companies are cutting tools left and right, and Figma’s pushing into presentations and marketing where they’re competing against way cheaper specialized options. That 46% growth rate was pandemic-driven digital transformation - that’s over. I’m seeing enterprise deals take forever to close and everyone’s way more price-sensitive now. The whole Adobe acquisition mess didn’t help either. Sure, the $1B breakup fee looked nice, but it covered up some real growth problems. Your $27.50 target assumes they can keep premium pricing while going down-market - that doesn’t make sense. I’d dial back expectations on both growth and margin expansion timeline.