Figma shares jumped 10.4% to $24.41 in Tuesday morning trading, lifting the company's valuation to approximately $11 billion. The move extends a recovery for software stocks following a recent sector-wide selloff.
Investor sentiment appears to be shifting, with retail inflows into BlackRock's iShares Expanded Tech-Software Sector ETF (IGV) reaching a record $176 million on a one-month rolling basis. This suggests dip-buying activity is emerging after last week's declines, which were fueled by concerns that artificial intelligence advancements could disrupt certain software products.
Despite the rebound, the software and services group has underperformed the S&P 500 by nearly 24 percentage points over the past three months. Options markets continue to price in significant volatility, with 30-day implied volatility for IGV around 41% and short interest near record levels.
A minor analyst adjustment may have contributed to the positive momentum. Wall Street Zen reportedly upgraded Figma from "sell" to "hold" on Sunday.
The San Francisco-based collaborative design software provider, which went public in July after its planned $20 billion sale to Adobe fell through, has seen its stock trade between $19.85 and $142.92 over the past 52 weeks.
All eyes now turn to Figma's upcoming earnings report scheduled for February 18. Investors will scrutinize management commentary on customer demand, pricing dynamics, and competitive pressures, particularly as AI features proliferate across design and productivity tools.
The broader market showed mixed signals on Tuesday following unexpectedly flat U.S. retail sales data for December. Meanwhile, Morgan Stanley warned that AI-related anxiety is beginning to affect credit markets, though an immediate spike in defaults appears unlikely.
