Figma Inc. shares climbed nearly 7% on Monday, reaching $20.08, as investors positioned themselves ahead of the company's first-quarter earnings report scheduled for May 14. The stock opened the session at $18.72 and touched a high of $20.66 before settling, marking a notable gain from Friday's close of $18.74.
Earnings Expectations
The San Francisco-based design software company has guided investors to expect first-quarter revenue in the range of $315 million to $317 million, representing approximately 38% growth at the midpoint. This projection will be put to the test as the company navigates an increasingly competitive landscape shaped by artificial intelligence.
Analyst Sentiment
Wall Street remains cautious on Figma's prospects. According to MarketBeat data as of May 2, only four out of 15 analysts covering the stock recommend buying, while 10 advise holding and one suggests selling. The average 12-month price target stands at $43.25, indicating potential upside but reflecting limited conviction among analysts.
Market Performance Since IPO
Figma went public in July 2025 to significant fanfare, with shares surging 250% on the first day of trading. However, the stock has since fallen approximately 80% from that initial peak, highlighting the volatile nature of investor sentiment. Year-to-date, shares have swung wildly between $16.60 and $142.92.
Financial Performance
The company's growth narrative remains intact. In the fourth quarter of 2025, Figma reported revenue of $303.8 million, a 40% increase year-over-year. Full-year 2025 revenue reached $1.056 billion, up 41% from the prior year. Net dollar retention, a key metric measuring customer spending patterns, improved to 136%.
AI Strategy and Competitive Landscape
Chief Financial Officer Praveer Melwani has positioned AI as a growth driver rather than a threat. "As AI gets better, Figma gets better," he told Reuters in February, emphasizing the company's goal of providing users with an "infinite canvas" for rapid idea development. Weekly active users of Figma's AI-powered app builder, Figma Make, surged over 70% from the previous quarter, with more than half of customers paying over $100,000 annually using the tool on a weekly basis.
However, competition is intensifying. On April 17, Anthropic launched Claude Design, enabling users to create visuals directly through its AI platform. Google introduced its Stitch tool in March, allowing rapid UI prototyping and integration into developer workflows. Adobe, the dominant player in creative software, continues to embed AI features across its product suite.
Investment and Costs
Figma's increasing investment in AI and other priorities, coupled with stock-based compensation, has driven up costs. Executives have warned that heavier AI spending will weigh on gross margins. In the fourth quarter, the company reported a GAAP operating loss of $195.5 million.
Outlook
Monday's share price action appears to reflect positioning ahead of earnings rather than a definitive shift in sentiment. The May 14 report will be a critical test of whether Figma can sustain its growth trajectory amid mounting competition. Investors will be watching closely for updates on revenue, margins, and AI adoption metrics.
