Figma, Inc. (NYSE: FIG) experienced a sharp rally on Thursday, with shares climbing 11.8% to $21.79 in afternoon trading. The surge outpaced gains in other software stocks and major growth ETFs, driven by a combination of index inclusion and aggressive options activity. The stock, while still trading 34% below its July 2025 initial public offering price of $33, has moved 31% above its 52-week low.
Russell 3000 Inclusion Fuels Demand
The catalyst for Figma's jump was its addition to the FTSE Russell 3000 index, which tracks approximately $12.2 trillion in assets. The rebalancing, finalized after the close on June 26, placed FIGMA FIG into the technology sector, triggering significant benchmark-driven buying. Analysts at Jefferies, led by Steven DeSanctis, had described the rebalance as a "really massive trade," while Stephens' Melissa Roberts highlighted Friday as a "key liquidity day" for the index shift.
The inclusion puts substantial pressure on index funds to accumulate Figma shares, with volume surging as passive managers adjust their portfolios. This demand is expected to persist as the rebalance fully settles, providing a tailwind for the stock in the near term.
Options Market Heats Up
Options traders added to the momentum, with heavy call buying amplifying the move. According to data from TipRanks, 24,933 Figma calls changed hands on Thursday, roughly 1.5 times the normal volume. Implied volatility rose nearly 2 points to 85.77%, and the put/call ratio stood at 0.39, indicating strong bullish sentiment. The most active contracts were September $25 calls and July 2 weekly $20 calls. The previous day saw even higher activity, with 26,673 calls traded at 1.4 times normal flow and a put/call ratio of 0.32.
This surge in call buying likely forced dealers to hedge by purchasing shares, further fueling the rally. With short interest at 78.17 million shares as of June 15, the stock remains vulnerable to short squeezes, as any positive catalyst can accelerate upward moves.
Fundamentals and AI Focus
Figma's recent financial performance supports the bullish narrative. In its May earnings report, the company posted first-quarter revenue of $333.4 million, a 46% year-over-year increase. Net dollar retention reached 139%, while free-cash-flow margin stood at 27%. Management raised its full-year revenue guidance to a range of $1.422 billion to $1.428 billion. However, Figma reported a GAAP operating loss of $137.4 million, representing a negative 41% margin.
CEO Dylan Field emphasized the company's AI strategy, stating, "When code is a commodity, design is the competitive edge." CFO Praveer Melwani attributed the strong quarter to "stronger than expected seat expansion across entire organizations" and increased customer adoption of AI tools. Notably, nearly 60% of customers spending over $100,000 annually used Figma Make weekly, and more than 75% of Org and Enterprise users who hit their AI credit cap continued using credits in April.
Market Context and Outlook
The rally came amid a broader market downturn, with the Nasdaq Composite falling 1.54% and the S&P 500 losing 0.72%, as tech stocks declined for a second consecutive day. Adam Sarhan, CEO of 50 Park Investments, noted that weak jobs data "takes the pressure off the Fed to raise rates in the short term," which may support growth stocks like Figma.
Despite the recent pop, Figma's stock is still down approximately 85% from its 52-week high of $142.92. The company trades at about 8.0 times its midpoint revenue guidance, reflecting market focus on growth rather than current GAAP profitability. The key challenge remains proving that AI tools can translate into sustained revenue per customer growth.
The New York Stock Exchange will close its main session at 4 p.m. ET today and will be shut on Friday for the Independence Day holiday. Heavy trading in July 2 $20 calls this week suggests some of Thursday's volume may unwind at the close. Figma's next earnings report is scheduled for August 14.
