Figma stock tanked 15% as post-IPO shine dimmed fast. After its blockbuster debut back in July, the design software firm took a heavy hit on Thursday when second-quarter earnings came in below lofty expectations.

Revenue growth was solid, but not enough to satisfy the hype, and the stock tumbled more than 15% in premarket trade, wiping away much of the early enthusiasm.

It’s a reality check for investors, as the market starts to rethink Figma’s valuation in what’s already a shaky tech environment.

Figma stock: Earnings highlight growth but not enough to satisfy investors

Figma’s Q2 numbers looked solid on paper as revenue was up 41% year-over-year to $249.6 million, a touch above the $248.8 million analysts were looking for.

Adjusted EPS landed at $0.09, just a cent better than forecasts. But even with that momentum, the results weren’t enough to keep the post-IPO rally alive.

Figma stock has now slid more than 50% from its early peak, with the market cap down about $5 billion from Wednesday’s $33.2 billion close.

The experts are also pointing towards the end of the employee lock-up period, which could flood the market with more shares, adding to the selling pressure.

With just 41% of shares currently in the float, liquidity is thin, which makes the stock especially prone to big price swings. On top of that, Figma’s valuation looks stretched as its P/E is sitting near 299 times projected earnings, miles above established rivals like Adobe.

That kind of premium only works if growth keeps exceeding expectations, and investors are starting to question if it can.

What analysts say?

Piper Sandler’s analyst summed it up by saying the recent swings suggest volatility is likely to stick around in the near term.

The analyst suggested investors could look for chances to add on weakness but cautioned that the market is still wrestling with Figma’s rich valuation and growth outlook.

Others in the industry point out the tougher road ahead as Figma still has to prove it can turn strong growth into lasting profitability while layering in AI tools and navigating pricing pressures in a crowded design software space.

Even with the recent stumble, a lot of analysts are still upbeat on Figma’s longer-term story, pointing to its expanding lineup of products and a steadily growing customer base.

That said, they warn investors should expect more bumps along the way as the company works through the shift from high-growth startup to a steadier public player.

The next few quarters will be key as Figma has to prove it can live up to the lofty IPO valuation while facing tighter scrutiny and a changing market backdrop.

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