Wall Street’s outlook on Figma (NYSE:FIG) has shifted noticeably over the last quarter, characterized by a mix of caution and indifference among financial analysts. While the software company continues to post aggressive revenue growth, concerns over profitability and valuation have prompted a wave of price target reductions. Concurrently, the design platform is making significant operational strides in Europe, securing critical security certifications to court the public sector.
Wall Street Sentiment Cools
In the most recent quarter, eight financial analysts weighed in on Figma’s prospects, revealing a distinct lack of strong buying pressure. The breakdown of recent ratings shows a market in wait-and-see mode: five analysts hold an “Indifferent” stance, while three remain “Somewhat Bullish.” Notably, there were no outright bullish or bearish extremes recorded in the past month.
This hesitation is most visible in the revision of price targets. The average twelve-month price target for the stock now sits at $49.62, representing a sharp 22.99% decline from the previous average of $64.43. The range of expectations is wide, with the most optimistic valuation hitting $70.00 and the lowest dropping to $35.00, suggesting significant uncertainty about the company’s near-term trajectory.
Breakdown of Analyst Actions
A closer look at individual analyst activity highlights the trend of tempering expectations. Several major firms have adjusted their positions to reflect changing market conditions:
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Piper Sandler: Hannah Rudoff lowered the firm’s price target significantly from $70.00 to $35.00 while maintaining an Overweight rating. In a separate note, the target was previously adjusted from $85.00 to $70.00, marking a consistent downward trend.
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Morgan Stanley: Elizabeth Porter lowered the target to $48.00 from $65.00, holding an Equal-Weight rating.
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JP Morgan: Mark Murphy reduced the target to $60.00 from $65.00, maintaining a Neutral stance.
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RBC Capital: Rishi Jaluria lowered the target to $38.00 from $65.00 with a Sector Perform rating.
Not all news was negative, however. Kash Rangan of Goldman Sachs raised the price target to $54.00 from $49.00, though he maintained a Neutral rating. Meanwhile, Michael Turrin at Wells Fargo held steady with an Overweight rating and a $52.00 target. Stifel’s Parker Lane initiated coverage with a Hold rating and a $40.00 target.
Financials: Growth vs. Profitability
The divergence in analyst opinions often stems from Figma’s fundamental financial picture, which presents a classic “high growth, high burn” scenario. As of September 30, 2025, the company reported a robust year-over-year revenue growth rate of 38.03%, outpacing the average for peers in the Information Technology sector. This underscores the strong market demand for its browser-based design platform.
However, profitability metrics remain a concern. The company’s market capitalization has dipped below industry benchmarks, potentially signaling investor skepticism regarding its operational scale. More critically, Figma reported a net margin of -400.12%, indicating substantial costs associated with its expansion. Returns on investment are similarly pressured, with a Return on Equity (ROE) of -88.24% and a Return on Assets (ROA) of -53.41%.
On the positive side, the balance sheet appears stable regarding leverage. The debt-to-equity ratio stands at a low 0.04, reflecting a conservative approach to debt financing that keeps the company less dependent on external borrowing than many of its competitors.
Strategic Wins in the DACH Region
While financial analysts recalibrate their models, Figma is aggressively fortifying its position in the European market. The company recently announced it has received the C5 attestation (Cloud Computing Compliance Criteria Catalogue) from the German Federal Office for Information Security (BSI).
This certification is a pivotal development for Figma’s operations in the DACH region (Germany, Austria, and Switzerland). The C5 framework is a rigorous standard designed to assess the information security, risk management, and operational transparency of cloud providers. By securing this attestation, Figma has validated its ability to meet the strict regulatory requirements necessary to serve clients in the public sector, government agencies, and highly regulated industries like banking.
Mareike Busche, Senior Director for DACH & CEE at Figma, noted that the C5 attestation serves as proof that the platform meets the high security and compliance demands of the region. She emphasized that this allows the company to support organizations navigating complex regulatory landscapes.
Localization and Data Sovereignty
The push for compliance is paired with a broader localization strategy. Figma has completed the translation of its platform for the DACH market, allowing teams in these countries to utilize the software in their native languages.
Furthermore, the company has introduced local data residency capabilities within the European Union. This move is designed to address the growing concerns over data sovereignty, ensuring that European customers can store their data locally. This feature is particularly crucial for public sector entities and enterprises that require strict control over where their information resides while still collaborating via the cloud.
