Figma, Inc.

Based on the provided analysis, here is a comprehensive review of FIG.

Technical Analysis The stock is in a severe and persistent downtrend, trading near its 52-week low after an 82% drawdown. Its extremely negative beta indicates it moves erratically and opposite the market, suggesting high volatility and speculative trading. While technically oversold, there is no clear catalyst or pattern indicating a reversal is imminent.

Fundamentals FIG's fundamentals are alarming, with a catastrophic swing to a $1.1 billion net loss in Q3, resulting in a -400% net profit margin. Although the balance sheet shows low debt and adequate liquidity, operational metrics are deeply negative, with a -79% Return on Equity, indicating the core business is deeply unprofitable and inefficient.

Valuation & Risk Valuation is challenging due to negative earnings, and the high price-to-book ratio suggests the stock is expensive relative to its asset base. The risk profile is exceptionally high, characterized by extreme volatility, massive historical losses, and potential illiquidity, making it a highly speculative instrument.

Recommendation We recommend a Strong Sell on FIG. The combination of a fundamentally broken business model, catastrophic profitability, and extreme price volatility presents an unacceptable level of risk for most investors. While the stock is oversold, the absence of any positive operational turnaround catalysts suggests the downside potential remains significant. Investors should avoid this position.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, the 12-month outlook for FIG is decidedly negative. The most significant headwind is the absence of a visible catalyst to reverse its fundamentally broken business model, characterized by catastrophic quarterly losses and a -79% Return on Equity. The primary risk remains extreme volatility and the potential for further declines, as the stock's oversold condition does not equate to a viable recovery without a clear operational turnaround. Given the severe downside momentum and lack of positive analyst targets, the stock is expected to remain under significant pressure, with a high probability of retesting or breaking below its current 52-week lows.

Wall Street Consensus

Most Wall Street analysts are optimistic about Figma, Inc.'s 12-month outlook, with consensus target around $25.86, indicating expected upside potential.

Overall, FIG has investment potential but also faces challenges. Here are key factors to weigh before investing.

FIG has experienced catastrophic performance over the past year, evidenced by an 82% maximum drawdown and a current price near its 52-week low.

The stock's short-term performance is severely negative, with a 27% drop over one month and a 48% decline over three months, significantly underperforming the market during this period. Its extreme negative beta suggests it has moved inversely and with high volatility relative to broader market trends.

Currently trading just 25% above its 52-week low, the stock is in a deeply oversold condition. This positioning, combined with the massive price decline from its high, indicates substantial pessimism is priced in.

Revenue & Profitability: FIG's Q3 performance shows concerning deterioration, with revenue growth offset by severe profitability challenges. While revenue increased to $274 million from $250 million in Q2, the company swung dramatically from near-breakeven to a net loss of $1.1 billion, reflecting unsustainable operating expense growth. The net profit margin collapsed to -400%, indicating significant operational inefficiencies relative to revenue scale.

Financial Health: The company maintains reasonable liquidity with a current ratio of 2.93 and minimal debt levels at a 2.9% debt ratio. However, negative EBITDA of $1.1 billion in Q3 raises concerns about cash flow sustainability, though the cash flow to debt ratio of 0.84 suggests some capacity to service obligations. The absence of interest expense provides temporary relief but doesn't address the core profitability issues.

Operational Efficiency: FIG demonstrates poor operational efficiency metrics, with return on equity at -79% and asset turnover of just 0.13 indicating ineffective utilization of capital. The negative ROE reflects the substantial losses relative to shareholder equity, while the low asset turnover suggests the company is generating minimal revenue from its asset base. These metrics highlight significant challenges in converting investments into profitable operations.

Valuation Level: FIG's negative trailing and forward P/E ratios indicate the company is currently unprofitable, making traditional P/E-based valuation impractical. The negative EV/EBITDA further confirms significant earnings challenges. With a price-to-book ratio of 8.04, the market is valuing FIG substantially above its tangible asset base, suggesting elevated expectations despite current negative earnings.

Peer Comparison: Without industry average data available, a precise comparative valuation cannot be established. However, FIG's negative earnings multiples and elevated PB ratio would typically place it at a disadvantage relative to profitable peers in most financial services sectors. The absence of positive industry benchmarks underscores FIG's atypical valuation profile among financial companies.

Volatility risk appears extreme, with a profoundly negative beta of -3.58, indicating the stock has historically moved strongly opposite the broader market. This is coupled with a massive one-year maximum drawdown of -82.47%, demonstrating potential for catastrophic losses during adverse periods despite its inverse correlation. Such metrics suggest extreme price instability and high speculative risk.

Other risks include an unusual lack of reported short interest, which for a security with such high volatility could indicate very low trading volume or liquidity. This illiquidity poses a significant risk, as it may be difficult to enter or exit positions without causing substantial price impacts, potentially amplifying losses.