Why Is Figma Stock Dropping : A 2026 Market Analysis

Market Valuation Realities

In recent months, Figma (FIG) has experienced a significant drawdown, with the stock price falling as much as 70% to 80% from its initial highs. This decline is largely attributed to what analysts describe as a "detached-from-reality" valuation that occurred during the company's entry into the public markets. When a company is priced for perfection, any shift in market sentiment or macroeconomic conditions can lead to a rapid correction.

Investors who ignored the high valuation multiples during the peak are now facing the consequences of a market-wide repricing of enterprise software. As interest rates and growth expectations shifted throughout 2025 and into early 2026, the premium once commanded by high-growth SaaS (Software as a Service) companies has shrunk. Figma, despite its strong product-market fit, was not immune to this sector-wide sell-off.

Impact of AI Integration

The rise of artificial intelligence has created a dual-edged sword for Figma. On one hand, investors are concerned that AI could upend the traditional business model of selling enterprise design software. If AI tools can automate the creation of user interfaces and digital assets, the perceived value of a seat-based subscription model—where companies pay per designer—might decrease.

Conversely, Figma has leaned heavily into AI with features like "Code to Canvas." This tool allows teams to convert AI-generated code directly into editable Figma designs. While this bridges the gap between developers and designers, some critics argue it risks making Figma a gateway to other AI ecosystems, such as Anthropic’s Claude. This shift in the product development stack creates uncertainty about Figma’s long-term control over the design workflow.

Monetization and Margin Pressure

Figma’s management has signaled a strategic shift toward AI investment, which involves intentional margin compression. To stay competitive in 2026, the company is spending heavily on computing infrastructure to power its "Make" services. While these features are popular—with weekly active users for AI tools increasing by 70% recently—the cost of running these models impacts the bottom line.

The market is currently weighing whether Figma can successfully monetize these AI additions. While adjusted gross margins have remained stable at around 86%, the operating income is being reinvested into research and development. Investors are cautious, waiting to see if these investments will lead to a new era of accelerated growth or simply higher sustaining costs.

IPO Lockup Mechanics

A technical factor contributing to the stock's volatility involves the mechanics of its IPO lockup period. Figma’s IPO structure included a performance-based provision. If the stock price maintained a level 25% above the offering price for five consecutive days, a portion of the locked shares would be released early.

In Figma's case, this threshold was met, leading to an early release of 25% of insider and employee shares after only 36 days, rather than the standard 180-day period. This sudden increase in the circulating supply of shares created immediate downward pressure on the price as early investors and employees sought to diversify their holdings. This influx of "secondary" supply often overwhelms market demand in the short term, leading to the sharp percentage drops observed by retail traders.

Current Financial Performance

Despite the falling stock price, Figma’s underlying business fundamentals remain robust. In the fourth quarter of 2025, the company reported revenue of $303.8 million, representing a 40% year-over-year growth rate. This exceeded many Wall Street estimates and showed that the core design business is still expanding rapidly among large enterprise clients.

Metric	Q4 2025 Result	2026 Guidance
Revenue Growth	40% YoY	~30% Projected
Net Dollar Retention	136%	Stable
Gross Margin	86%	85-87%
Annual Revenue	$1.21B (Est.)	$1.366B - $1.374B

Enterprise Adoption Trends

Figma’s "Net Dollar Retention" rate stands at 136%, which indicates that existing customers are spending significantly more with the platform each year. This is a critical health indicator for SaaS companies. Furthermore, more than half of Figma’s largest customers—those spending over $100,000 annually—have already integrated AI features into their weekly workflows. This suggests that while the stock price is dropping, the product's "stickiness" remains high.

Future Growth Outlook

Looking ahead through 2026, Figma is projecting total revenue between $1.366 billion and $1.374 billion. While this represents a slight deceleration from previous 40% growth rates to approximately 30%, it remains high compared to the broader software industry. The company is also collaborating with major platforms like ServiceNow to expand its reach into application development for large-scale corporations.

The disconnect between the company's strong financial results and its dropping stock price highlights a transition from a "hype-driven" valuation to one based on sustainable earnings. For investors, the focus has shifted from simple user growth to AI monetization efficiency. If Figma can prove that its AI tools drive higher revenue per user without permanently eroding margins, the stock may find a floor.

Investment Risks in 2026

The primary risks for Figma moving forward include intense competition from legacy players and new AI-native design startups. Additionally, the broader technology sector remains sensitive to interest rate fluctuations. For those looking at diversified digital asset opportunities, you can check the BTC-USDT">WEEX spot trading link for current market pairs and liquidity options. In the software space, Figma must navigate a landscape where "design" is increasingly being handled by automated agents, requiring the company to constantly reinvent its value proposition to justify its enterprise pricing.

Summary of Sentiment

The drop in Figma stock is a combination of three main factors: the correction of an overextended IPO valuation, the technical pressure of early share lockup releases, and investor anxiety regarding the costs and competitive threats of the AI era. While the company continues to beat revenue expectations and maintain high retention, the market is currently demanding more clarity on long-term profitability in an AI-first world. As of February 2026, the stock remains a "show-me" story, where the company must demonstrate that its massive AI investments will yield a significant return on investment for shareholders.