Why Has Figma Stock Dropped 70% Since…

This article summarizes general market information for informational purposes. It is not investment advice — stock prices, analyst ratings, and financial metrics change constantly, and any investment decision should be based on your own research and risk tolerance, ideally with input from a licensed financial advisor.

Key Takeaways

Figma (NYSE: FIG) traded around $21 in early October 2026, down roughly 70% from its 52-week high of $71.48 reached shortly after its July 2025 IPO, and down more than 55% year-to-date for much of 2026.
Despite the stock's collapse, the underlying business has kept accelerating: Q2 2026 revenue grew 48% year-over-year to $370.1 million, marking the company's third consecutive quarter of accelerating growth.
Shares still fell 15–18% in the session after that Q2 report, as investors focused on Q3 guidance of $373–375 million — implying growth decelerating to around 36% — and on rising AI-related costs squeezing margins.
CEO Dylan Field forfeited $46 million in stock tied to the share price decline, disclosed the same day as the Q2 earnings report.
Analysts remain broadly bullish on paper, with a consensus price target implying meaningful upside from current levels, even as company insiders have been net sellers of stock by a wide margin over the past several months.

From the hottest IPO of 2025 to a 70% drawdown

Figma's stock market debut in July 2025 was about as hot as IPOs get: the company priced its offering at $33 per share, raised nearly $1 billion, and shares later touched a 52-week high of $71.48 that October — more than double the IPO price, reflecting intense investor enthusiasm for a profitable, fast-growing design software company entering public markets during a strong period for tech listings.

That enthusiasm has reversed sharply since. By April 30, 2026, shares had fallen all the way to a 52-week low of $16.60, and the stock has spent most of 2026 trading in the low-to-mid $20s, down roughly 70% from its post-IPO peak and more than 55% on a year-to-date basis for much of the year. That's a genuinely steep decline for a company whose core financial metrics, on paper, kept improving throughout the same period — which is exactly what makes Figma's story worth examining closely rather than dismissing as a simple growth-stock unwind.

A business that keeps accelerating, not decelerating

Here's the part of Figma's story that complicates the simple "growth stock falls out of favor" narrative: the underlying business has actually been getting stronger, not weaker, through 2026. Second-quarter revenue reached $370.1 million, up 48% year-over-year — the company's third consecutive quarter of accelerating growth, a genuinely rare pattern for a software company already operating at this scale. Net dollar retention held at a strong 136%, meaning existing customers were spending substantially more over time, and paying customers with more than $10,000 in annual recurring revenue grew 34% year-over-year.

CEO Dylan Field specifically tied this acceleration to Figma's AI strategy, framing the company's opportunity as "the canvas for full-stack creation" — bringing code, new creative capabilities, and AI agents directly into the product, broadening what the platform can be used for beyond traditional design work. CFO Praveer Melwani called Q2 "a record quarter and our first full quarter of AI credit monetization," and more than 80% of paying customers above $10,000 in ARR were consuming AI credits weekly by that point — real evidence that the AI features were driving actual usage, not just marketing attention.

So why did the stock still crash on genuinely good news?

The disconnect comes down to two things the market weighted more heavily than the headline growth rate. First, Figma's own guidance for the following quarter implied deceleration: Q3 revenue guidance of $373 million to $375 million works out to roughly 36% year-over-year growth at the midpoint — still strong in absolute terms, but a meaningful step down from 48%, and exactly the kind of deceleration that growth-stock investors tend to punish severely regardless of how strong the prior quarter was.

Second, rising AI infrastructure costs have become a genuine margin concern. Coverage following the earnings report specifically noted that Figma's artificial intelligence costs "soared," a dynamic increasingly common across software companies racing to build AI features: the same AI capabilities driving new revenue and usage also carry real, scaling compute costs that can compress margins faster than revenue grows to offset them. That combination — slowing forward growth guidance plus rising AI costs — was enough to send shares down between 15% and 18% in the session following an otherwise-strong quarter, extending a decline that was already severe.

The CEO forfeiture, and what insider activity has looked like

One unusual detail disclosed alongside the Q2 earnings report: CEO Dylan Field forfeited $46 million in stock tied directly to the share price decline, a detail that drew its own separate news coverage. Arrangements like this typically relate to performance-linked equity structures where the ultimate value or vesting of certain awards depends on the stock reaching specific price levels — meaning the forfeiture is itself a direct, quantified consequence of how far the stock has fallen since those awards were originally structured.

More broadly, tracking services have shown company insiders as substantial net sellers of Figma stock over recent months, selling considerably more than they've bought. That pattern alone doesn't necessarily signal a lack of confidence — insiders at newly public companies often sell for diversification, tax, or liquidity reasons unrelated to their view of the stock's prospects — but it's a data point worth weighing alongside the more bullish signals, like continued revenue acceleration, when forming a complete picture.

What Wall Street currently thinks

Despite the stock's steep decline, analyst sentiment has remained constructive. Coverage has pointed to a consensus rating of "Buy" with a price target implying substantial upside from recent trading levels — one tracking service cited a target near $30.80 against a price around $20.70, implying close to 49% potential upside, while a separate analysis specifically raised its target from $22 to $25 citing refreshed assumptions around discount rate, revenue growth, profit margin, and future earnings multiple. That gap between a battered stock price and still-bullish price targets reflects genuine analyst belief that Figma's AI-driven growth story remains intact even after the market's harsh reaction to slowing guidance.

What this means if you're evaluating FIG right now

If you're drawn to the valuation argument, understand that Figma's decline has happened almost entirely despite — not because of — weakening fundamentals. Revenue growth has accelerated for three straight quarters; the market's concern is specifically about the next quarter's guided deceleration and AI cost trends, not a broad business slowdown that's already occurred.
If AI monetization is central to your thesis, the credit consumption data is worth tracking closely in coming quarters. More than 80% of larger customers using AI credits weekly is a genuinely strong early signal, but whether that usage converts into durable, margin-friendly revenue over time is still an open question the market is actively pricing.
If insider selling concerns you, keep it in context rather than treating it as a standalone red flag. Heavy insider selling is common at newly public, high-profile companies for reasons unrelated to business outlook, though it's still worth weighing alongside other signals rather than ignoring entirely.
Either way, Q3 results — expected around November 11, 2026 — are the next concrete test of whether the growth deceleration implied by guidance actually materializes, or whether Figma beats its own cautious forecast the way it has in recent quarters.

Frequently Asked Questions

Why did Figma's stock fall so much if revenue growth is accelerating? The decline followed concern about forward guidance implying slower growth next quarter (around 36% versus the 48% just reported) combined with rising AI infrastructure costs pressuring margins — investors reacted to the forward-looking signals more than the strong quarter just reported.

What happened with Figma's CEO forfeiting stock? CEO Dylan Field forfeited $46 million in stock tied to the share price decline, disclosed alongside the company's Q2 2026 earnings report — generally understood to relate to performance-linked equity awards whose value depends on the stock reaching certain price levels.

Is Figma's AI strategy actually working? Early usage data is genuinely encouraging — more than 80% of paying customers above $10,000 in annual recurring revenue were consuming AI credits weekly as of Q2 2026, and the company's first full quarter of AI credit monetization contributed to a record quarter. Whether that usage translates into durable, profitable growth over a longer period remains to be seen.

How far has Figma stock actually fallen from its highs? From a 52-week high of $71.48 reached in October 2025, shortly after its IPO, to trading around $21 in early October 2026 — a decline of roughly 70%, despite the underlying business continuing to grow revenue at an accelerating rate throughout that period.

Sources & References

Figma Inc. SEC Form 8-K, Q2 2026 earnings release and call transcript
MarketBeat, "Figma Q2 2026 Earnings Report" and stock analysis
StockAnalysis.com, "Figma (FIG) Stock Price & Overview"
Investing.com, "Figma (FIG) Earnings Date & Report"
Simply Wall St, "FIG: AI Credit Monetization And Rising Costs Will Shape A Measured Outlook"
IndMoney, "Figma, Inc. Class A (FIG) Live Share Price"
Yahoo Finance, "Figma (FIG) Down More Than 55% Year-To-Date, The Street Remains Bullish"

Why Has Figma Stock Dropped 70% Since Its IPO Despite Accelerating Revenue Growth?