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“Figma’s first earnings report after stellar debut underwhelms investors“—you can say that again!—reporter Zaheer Kachwala reached out to us for insights as to why the stock was down significantly in afterhours trading.

Priced for perfection met merely excellent. Great product, good quarter, unforgiving valuation—the trifecta of a red candle😏

QUOTED EXCERPT

“The stock had been priced for perfection at over two hundred times expected earnings, which means even solid numbers cannot carry that many layers without some flattening,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.

“Figma’s high valuation was built on story and future potential and management’s outlook disappointed,” he said.

ADDITIONAL THOUGHTS

Figma’s chart lost its straight edge because the print was not strong enough with profitability missing Street hopes since the company delivered a tiny profit instead of the penciled in nine cents in earnings per share, so investors tapped undo after hours.

Fresh supply fears did not help since portions of the lockup open soon for some employees, adding a whiff of selling pressure to the canvas. Early analyst coverage has also skewed neutral which dulls the buy the dip impulse, so the move reads like a classic sell the news in a high beta font.

The business is compounding, the multiple is decompressing and you’ve got two lines crossing southbound📉📉

Additional apprehension is that AI can be both Figma’s friend when used internally as well as its swiftest competitor from the outside.

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Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-25-218