Figma stock has resumed its downward trajectory, sliding to around $20 after a brief rebound to $31.30 in late August. The decline reflects persistent concerns about AI disruption in the design software space, but the company's underlying business continues to show robust growth.
Strong Revenue Growth Amid AI Fears
Figma, known for its collaborative design and prototyping platform, reported second-quarter revenue of $370 million, a 48% year-over-year increase. This figure surpassed both company guidance and analyst expectations. The growth was driven by an expanding paid customer base and increased user adoption, with 15,964 customers paying over $10,000 in annual recurring revenue (ARR) and 1,635 paying over $100,000.
Notably, the company has successfully monetized AI features, with over 80% of customers with more than $10,000 ARR using AI credits weekly. The launch of Code Layers, which enables users to generate ideas and build products within the platform, further supports the growth narrative.
Analyst Outlook Remains Bullish
Despite the stock's recent weakness, analysts maintain a positive stance. The average price target stands at $43.92, implying a 116% upside from current levels. Bank of America has set a target of $33, while Citigroup recently raised its target from $35 to $37.
Looking ahead, consensus estimates project third-quarter revenue of $375.7 million, a 37% annual increase. For the full year, analysts expect revenue to grow 40% to $1.47 billion, followed by $1.82 billion in the next fiscal year. Earnings per share are forecast to reach 29 cents, with management's conservative guidance suggesting potential upside.
Technical Analysis Points to Further Downside
From a technical perspective, Figma stock has been in a strong downtrend, falling from its August high of $31.30. The shares have dropped below the 50-day exponential moving average and remain under the Supertrend indicator, signaling bearish control. The Relative Strength Index (RSI) is approaching oversold territory at 30.
Given these signals, the stock may continue to face pressure in the near term. A break below the current level could lead to a test of the $16.48 support zone, which marked the low in April and June. However, a bounce from that level is possible as investors look for value.
While AI disruption remains a valid concern, Figma's strong revenue growth and successful AI monetization provide a fundamental counterweight. The stock's proximity to critical support makes it a key level to watch for traders and investors alike.
This article is for informational purposes only and does not constitute financial advice.
