There has been some discussion about Figma recently, have you heard? It performed well in the second quarter report, but the market reaction was somewhat disappointing. The company plans to increase its investment in the AI sector, which may put pressure on profit margins. Additionally, its price-to-sales ratio is still a bit high.

Not long ago, Figma's stock price skyrocketed from $33 to $115 after its IPO, reaching a peak of $142.92 at one point. However, after this frenzy, doubts about its valuation began to spread, and the stock price fell by 20% after its first public financial report. The question now is, does Figma's market value really justify the $27 billion? Let's take a look at the second quarter's situation.

In the second quarter, Figma's revenue grew by 41%, reaching approximately $250 million, exceeding market expectations. Although the growth rate has slowed from 46% in the first quarter, the company's operating profit and earnings per share were both above expectations. However, what has unsettled the market is Figma's guidance, which anticipates a slowdown in revenue growth to about 33% in the third quarter, and a downward revision of the full-year adjusted operating income forecast, partly due to the company's investment in new products and AI.

CEO Dylan Field stated that when discussing AI investments, they expect profit margins to decline in the short term, but in the long term, it is an investment. Although profits may be affected, the new products launched by Figma signify its long-term plans for the future.

In terms of stock price, although Figma's performance is much more expensive than traditional cloud software stocks, it is worth this premium due to its strong growth and the influence of the company. Looking back, Adobe attempted to acquire Figma for $20 billion in 2022, a price that to some extent reflects the market's expectations for it.

In summary, considering Figma's current market size and future growth potential, a valuation of $27 billion does not seem exaggerated. Although the stock price may experience fluctuations, new products and investments in AI provide significant support. Investors should perhaps be prepared for volatility, but remain optimistic about long-term growth. What do you think? Feel free to leave a comment.