After riding up the AI-hype mania for two days.
By Wolf Richter for WOLF STREET.
Shares of Figma, the AI-powered design software provider – “Make your ideas real with AI,” it says on its website – plunged another 7.4% to $24.00 on Monday, and is now down by 83% from the intraday high on August 1, 2025, the second day of trading after the IPO, and down by 80% from the closing high the same day, and down by 27% from the IPO price.
And thereby, Figma has made it into our pantheon of Imploded Stocks for which the minimum qualification is a plunge of 70% from the more or less recent high.
Figma went public on July 30, 2025, selling 12.47 million shares at the IPO price of $33 a share, for $1.22 billion.
But the public didn’t buy at the IPO price of $33. That’s the price at which the shares were sold by the company ($412 million), by some early investors, and by the founder (just over $800 million combined) to institutional investors that the underwriters had lined up as part of the IPO.
The next day, the first day of public trading, these institutional investors flipped some of those shares to the public that was foaming at the mouth. The first trade took place at $85 a share, then the shares exploded to $124.63 and closed at $115.50.
VC firms Index Ventures, Greylock, Kleiner Perkins and Sequoia “are sitting on $24 billion worth of stock after massive IPO pop,” CNBC gushed after the first day of trading.
The second day of trading, the same sort of mania we’ve seen in so many places pushed the price to $142.92 a share intraday, the all-time high, before closing at $122 a share, the all-time closing high, giving it a market cap of $60 billion.
Then the whole thing imploded. Today’s market cap is down to about $12 billion, which is still very high:
In the quarter ended June 30, its final quarter as a private company, but reported on September 4, about a month after the IPO, Figma had a net loss of $27 million on $250 million in revenues.
At the time, the company also disclosed that the lock-up period for some employees would expire later that week, at which point they could unload some of their shares, which would increase the supply of the shares.
The share price plunged 20% after the earnings announcement, from $68.13 a share at the close before the afterhours announcement, to $54.56 at the close the next day.
For its Q3, ended September 30, its initial quarter as a public company, Figma reported a net loss of $1.1 billion mostly due to stock-based compensation expenses associated with the IPO. It booked $274 million in revenues.
In Q3 a year earlier, when it was still a private company, it had had a loss of $16 million, on $198 million in revenues.
The five major venture capital holders have lock-up periods with staggered releases through mid-2026. And those are still to come.
Adobe had offered to buy Figma – to swallow a competitor – for $20 billion in September 2022, but they terminated the deal in December 2023 after intense scrutiny from competition regulators at the European Commission and the UK Competition and Markets Authority. Adobe had to pay Figma a breakup fee of $1 billion.
Figma’s cloud-based collaborative-design software, powered by AI, is used to build interfaces for web and mobile apps. “Start with a design and prompt your way to a functional prototype, fast,” it says. Pricing is subscription-based, ranging from a free “starter” version to $90 a month per user for the full-fledged enterprise version.
The collapse of the price of the shares from the mania high isn’t a sign that Figma doesn’t have useful products that companies and developers are willing to pay for, or that it cannot be profitable some day maybe. But it’s a sign of the mania in the markets, amid the constant and massive hype around AI and whatever else comes along. That mania will drive up anything to ridiculous highs.
And a market cap of about $12 billion, at today’s stock price, for a company with about $1.1 billion in annual revenues and big net losses possible for years to come is still very high.
The short interest is obviously huge, at 14.8 million shares, or about 8.6% of the public float. Volatility guaranteed.
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Interesting story on over-inflated valuation of an “AI” company.
Wolf – got any opinions on nuclear fusion companies ?
🤣
Nearly my entire life, nuclear fusion was just around the corner and it still is.
About Nuclear Fusion
Ever wonder what detonated the Big Bang that created the universe? It was a follow on event after a Tralfamadorian test pilot presses a button to initiate a fusion drive causing the previous universe to cease existence.
Some physicists thought detonating a nuclear bomb would destroy the Earth. Of course it didn’t, at least not yet. But an AI enabled fusion reactor enclosed in a magnetic resonance field will do it.
So it goes. Rest in peace Billy Pilgrim and better luck next time to all.
@Wolf
Sad, but true. Controlled fusion has been 30 years away since the 1970s, and continues to be 30 years away.
1950s. See Zeta in the UK
Wolf, Nvidia will still be a respectable $1.5 Trillion even after 70% plunge. And still be 10 times bigger it was in 2022. Does that count as Imploded?
These are deeply philosophical questions, for philosophy majors to write their term paper on: Is a stock that collapsed by 90% from the peak, but is still worth $450 billion, an imploded stock?
Wolf,
I may have been following nuclear fusion (for power) longer than you. I’m 73 years old and wanted to become a magneto-hydrodynamics engineer as a teenager. Fortunately, I wised up and had a good career in materials science for 40 years.
I was interested in TAE Technologies and thought that their approach had some legs. It is not that I thought it was around the corner, but maybe a decade or two. Unfortunately, for some reason (money, I guess) they joined with something called Trump Technologies. I don’t know anything about that, but it was enough for me to end my interest in them. I guess we are back to ‘around the corner.’
Premature ejaculation, believe thats what you call these things right?
/s
You’re behind on the curve here. The next big thing in Nuclear is SMR, small modular reactors:
Deployment in years rather than decades.
Flexibility to place where needed.
Lower cost per Mw/h.
/s
Nuclear is simply never going to be economically feasible compared to PV, the only legit reason is to balance the grid.
You must have a base load, and battery technology can’t provide it on a large scale right now, and might never be able to do so.
Most power companies are going to aeroderivative combustion turbines, running on natural gas and possibly hydrogen if that technology ever comes around.
I wish we hadn’t stopped building nuclear. At the same time, battery + solar is taking off right now more than most people realize. California here occasionally runs on 100% renewables. Right now on electricitymap, solar is supplying most of the regional grid here, nuclear is supplying more power than gas even though there’s only one plant left in the state itself, and 28% of the total power generation (8 GW) is currently just charging batteries.
With silver at ridiculous prices it is only a matter of time until we hear stories of thieves stealing solar panels for the $50 worth of silver in them.
They will progress to simply taking the parts where the silver is located.
Fusion is the crypto of physics. Fusion happens when enough nuclei are forced together long and hard enough for some of them to quantum tunnel their way to joining. We have the capability to make that happen for a tiny fraction of a second, but the only known force that can sustain a continuous reaction is a huge gravity well. Barring some major breakthrough in containment science (like figuring out how to create and manipulate mini black holes) sustained fusion will never happen on the surface of the Earth.
They had to go and ruin delicious FIGs!
A quite easy tree to grow, yet gives you a ton of fruit.
Kind of the Berkshire Hathaway of Trees
🥁
I guess money doesn’t grow on (fig) trees.
That’s pretty good! 🥁
So the product of a company that builds nothing real can now be termed “a Figma of your Artificial Imagination”?
Well played. I was thinking Figma-nt.
Badda Bing!
Just a foretaste of things to come. Most AI investors today will loose money before getting actual returns at the end of the next decade which is pretty far. Not saying a crash is inevitable and there won’t be winners but the plain magnitude of this revolution do looks like a gigantic ship going full speed with little margin for manoeuvers. Let’s hope there won’t be too many icebergs on her path. That said, we should not underestimate the risk for an economic chain reaction that will have everybody paying for bad and wrong decisions at the top just like 2008.
AI is like PC computers yeah they helped
But could we all have done our jobs without them and just a telephone and pen and paper? Sure we could!
Do our medical records need to be on a computer? No
Do our car records and bank records need to be on them? No
Is everything kind of the way it was in the 1980s? Sort of
I mean Warren buffet couldn’t even use a computer. Was he still super successful 1980 on? Yep, extremely successful
So will AI change much? Like the computer did? Doubt it, not more than 5-10%
Do they expect AI to change everything? Yes about 💯 change, wooooo!
But as we all know. Not gonna happen.
As a fun aside, could we throw everyone back into the 1980’s and see how they swim? That would be a fun experiment
Figma: Fwd p/s ~13. About 1 billion in TTM revenue.
Adobe: Fwd p/s ~4. About 23 billion in TTM revenue lol.
UX/UI is Fig primary space; Adobe ceded the market to them and largely stopped focusing on this space.
My question: who has been buying these shares from the start?
The CEO, haven’t you seen Industry on hbo?
Haha
People just want to make money. It doesn’t matter what it is. Meme stocks, cryptos, scams, no matter what. As long as they think it will go up, they’ll buy it. At least, Figma is a real company with real products that companies are willing to pay for, unlike cryptos. With cryptos, people are buying absolutely nothing other than the hope that someone else is going to pay even more for it (“Greater Fool” investment rationale). This has shaped the whole investing mentality.
Crypto is absolute trash and yet I know too many who are invested in it convinced they will be able to draw from it like a retirement fund in years to come.
Robust employment ($$ to gamble) and a lack of a proper, enduring market correction has created a nasty speculative market. Nothing will change till the new(er) generation lose their shirts on the market.
Purchased at $33.00 held for 6 months and sold for $39.00. Not a terrible return.
The risk tho of owning some random single stock.
Figma is a useful tool for sketching together a website. I tried it for a while as a substitute for mocking up sites instead of using Photoshop and it’s clearly a better tool for the job. That said, given the learning curve, and while I know it’s better for the job, given how we develop sites (for ourselves, not for outside users), I abandoned it. Nevertheless, I’m sure it remains a useful tool for pros and wannabes. That said, there are a butt load of alternatives, e.g. Penpot or Lunacy (which I rather like), and others. Finally, as regards AI, this has it’s place but I have only used it specialized instances. E.g. I want art in a certain style, or a graph and don’t want to trouble myself making it. However, I haven’t paid for use, as of yet, just because the utility hasn’t been high enough to me. Others will have different views. Anyway, if it were me (it’s not), I’d short Figma, but you do you.
Figma actually works pretty well for small applications. The problem that it probably can’t overcome is that it ends up controlling the applications you build. It stays on their platform, and you pay a monthly subscription for users to access it. You have no control over long-term pricing, system performance, or insight into basic IT issues like backup/restore, software rollback, etc… It rocks as a prototyping platform, not so much as a production platform which is where their subscription fees and profits really come from. I can see where an AI investor who doesn’t understand basic devops can be seduced by the product, and why its profit potential is hampered.
Can you just copy the code and steal the intellectual property of an AI you paid for?
The legal ramifications would be a giggle!
If the hype is to believed, then AGI, will replace all of these companies one could argue. After all, if AGI can do everything better than not only a single human, but a human enterprise, then it can create the best products at the lowest price point. It’s almost the line from Highlander, “there can be only one!”
Next year – “Nvidia joins the exclusive club of imploded AI stocks, marking the official start of Dot Com 2.0.”
All brokerage companies and for that matter every stock company wants to make you a trader, that is how they make money. Love those day traders.
Buy gold and forget it. That’s how you make money
Figma was a good replacement for Photoshop for Web Design. It allowed you to produce HTML/CSS right from the design which was helpful.
But Claude is now a great replacement for Figma. We were heavy users of Figma but now everything is done with Claude. It creates the HTML and CSS, then creates the VUE/React Version, then the DB, then the backend code. It will get you 75% of the way to a code complete version. The quality of the code it produces has gotten significantly better over the last few months, as has our ability to use it.
We’re done with Figma and can’t imagine us ever going back. Their business model is dead … just like the jobs for the graphic designers who used Figma.
If only someone had invented a service where you can design websites, maybe call it WordPress or something. Unfortunately there are zero businesses doing this, so we need an AI to produce a statistically average site template.
/s
Vibe coding baby.
Even a 3 year old can do it.
Bye bye jobs
/s
MW: Oracle’s monster $25 billion debt financing points to anxieties around AI funding
Don’t know if you’ve already covered it, but you can add The Trade Desk (TTD) to your list. From a high of 139 in November 2024, it ended the day at 27.
Thanks, I’ve got PayPal coming later today.
MW: PayPal’s stock heads for near-historic decline upon ‘dramatic’ CEO change
Hah! I’m the sucker who’s buying this one (just a small dabble so far). We’ll see how it turns out, but kind of hard to argue with a fintech stock priced at 8pe
MW: Gold and silver rally after a two-session drop. Why the meme-like moves are so unusual.
MW: Opinion: Wall Street’s ‘smart money’ bought gold and silver just before they crashed. Learn from their mistakes.
1:04 PM 2/3/2026
Dow 49,243.37 -164.29 -0.33%
S&P 500 6,917.80 -58.64 -0.84%
Nasdaq 23,254.14 -337.97 -1.43%
VIX 18.30 +1.96 12.00%
Gold 4,969.80 +317.20 6.82%
Oil 64.08 +1.94 3.12%
Elon Musk Just Dropped a $1.25 Trillion Bomb on AI
Elon Musk Merges SpaceX and xAI in $1.25 Trillion Deal
Elon Musk has quietly pulled off what may be the most audacious corporate maneuver ever attempted. In a single transaction, Musk combined his rocket company and his artificial intelligence startup into a privately held giant valued at roughly $1.25 trillion, instantly making it the largest merger by valuation in modern history.
The deal brings SpaceX and xAI under one roof, valuing SpaceX at approximately $1 trillion and xAI at about $250 billion. While neither company is publicly traded, the implications of this move ripple far beyond private markets. This merger sends a clear signal about where the next phase of the AI economy is headed and why infrastructure, not just software, will determine the winners.
By combining xAI’s software and model development with SpaceX’s launch capability and satellite infrastructure, Musk is positioning the merged company to explore space-based computing powered by solar energy. The idea is radical, expensive, and technically complex. It is also a direct response to the economic reality of AI scaling.
Before they were an “AI” company they just developed and created the design system that is the de facto tool of choice most companies with UI/UX designers and developers. Maybe positioning themselves to participate in the AI hype bubble was a mistake, or maybe their business is going to be disrupted by generative AI, or both.