Should Investors Hold or Fold Figma Stock at a P/S Multiple of 9.46X?

Figma FIG stock is trading at a premium, with a forward 12-month Price/Sales of 9.46X compared with the Zacks Internet - Software industry’s 4.03X. The overvaluation is further established by the Zacks Value Score of F.

Figma Forward 12 Month (P/S) Valuation Chart

Figma is trading at a premium despite its 75% decline in stock price since going public. The stock has also underperformed the Zacks Internet - Software industry and broader tech sector. The industry has declined 20.1%, while the Computer and Technology sector has returned 8.3% in the same timeframe.

Figma Price Performance Chart Since IPO

Given these dynamics, investors are wondering if it's the right time to exit the stock or stay invested for the recovery. Let’s delve deeper into the fundamentals and financials to unravel the best strategy.

Figma Grapples With Declining Operating Income

Figma’s non-GAAP operating profit declined 22% year over year to $44 million in the fourth quarter of 2025, with a non-GAAP operating margin of 14%, down 1,200 basis points from the prior-year quarter. The declining trend has persisted in the past two consecutive quarters. The contraction in the margin is attributable to cost pressures emerging from the rollout of Figma Make and other AI features in the platform.

The company is also facing competitive challenges from established players, including Adobe ADBE, Microsoft MSFT and Atlassian TEAM. Adobe’s Firefly and Microsoft Copilot have been playing a crucial role in driving their respective top-line growth and profitability, causing them to burn into Figma’s market share.

Microsoft’s Teams and Office 365 suite provides collaboration and enterprise workflows, which directly compete with Figma across whiteboarding, developer workflows, AI productivity and enterprise adoption, leaving Figma with all these areas to defend. Adobe recently partnered with Google Cloud to enhance Adobe’s creative ecosystem with AI.

Atlassian is focusing on adding generative AI features to some of its collaboration software. Atlassian is partnering with Google Cloud to bring Atlassian’s AI-powered teamwork platform, including Jira, Confluence and Loom, onto Google’s AI-optimized infrastructure. This will allow for deeper Gemini integrations and smoother collaboration across platforms.

Rising Acquisition Cost Poses Challenge to Figma

Figma is prioritising long-term growth with multiple acquisitions and feature enhancements. Figma increased its acquisition activity in 2025 to keep up with the pace of change that generative AI players are bringing into the product development market. The company acquired Weavy and Payload CMS to deepen its portfolio.

Weavy is an AI-powered image and video generation startup that was acquired in October 2025 for over $200 million. Payload CMS is a headless content management system that will enable the company to convert AI-generated designs and code into controlled and deployable products.

These acquisitions have increased Figma’s goodwill from $11.38 million as of Dec. 31, 2024, to $101.4 million as of Dec. 31, 2025, increasing almost tenfold in a year. Figma’s revenues are showing a declining trend. Although the company ended 2024 with year-over-year revenue growth of 48%. In the first, second, third and fourth quarters of 2025, Figma delivered year-over-year growth of 46%, 41%, 38% and 40%, respectively.

The Zacks Consensus Estimate for Figma’s 2026 revenues shows year-over-year growth rate of 29.8%. The bottom line is pegged at 23 cents per share, indicating a year-over-year decline of 23%. The Zacks Consensus Estimate has been revised downward in the past seven days.

Conclusion: Sell Figma for Now

Figma’s premium valuation of 9.46X forward sales appears difficult to justify given the company’s slowing revenue growth, declining operating income and rising competitive pressure from larger, well-capitalized players like Adobe, Microsoft and Atlassian. Increased acquisition spending and investments in AI capabilities are weighing on margins. Considering these factors, we suggest that investors should stay away from this Zacks Rank #4 (Sell) stock at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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