As artificial intelligence (AI) booms, many software development companies, including Lovable and Bolt, are developing their own AI, posing a threat to Figma.
Design software maker Figma shares surged 250% in their first public offering after the company raised $1.2 billion in an initial public offering (IPO).
Figma is used to design interfaces for mobile and online applications. It increased its suite of products to be more useful for software development and general workplace communication. It introduced the Dev Mode platform in 2023 to enable closer collaboration with developers. Recently, it introduced artificial intelligence in many of its tools. This year, it announced Figma Make, an AI-powered tool to help users create functional prototypes from prompts.
Its shares closed at $115.50 each on Thursday, more than double the IPO price of 33 dollars a share. The trading gives Figma the biggest first-day pop in at least thirty days, especially for a US company raising more than $1 billion.
The first day of trading gives the company a market value of $56.3 billion, based on outstanding shares announced in its filings. The fully diluted value exceeds $65 billion when considering employee stock options, restricted stock units, and CEO restricted stock units.
Chief Executive Officer Dylan Field owns $6 billion in shares of the company. The skyrocketing share price impacted the performance-based benefits Field has, such as a 10-year “moon-shot” compensation package granted last month, and the average stock price reached $60.
The shares offered in its IPO were more than 40 times oversubscribed, with over half of its orders getting no stock. These concerns will put to rest any worries about software offerings in the US after SailPoint Inc.’s February debut.
The company sold 12.47 million shares in the IPO, while its investors, Index Ventures, Greylock Partners, and Kleiner Perkins sold 24.46 million shares.
Field stated that going public was a significant brand moment for the company that centers around design, creating tremendous value for its community and customers.
Its first-quarter revenue increased 46% annually, showing rapid growth.
Its long-term success depends on its ability to be used by office workers beyond designers. Andrew Reed, a board member of Figma, stated that software engineers, product managers, and marketers embrace its suite of products.
As AI booms, many software development companies, including Lovable and Bolt, are developing their own AI, posing a threat to Figma. Field stated that they want to create fabulous AI products and experiences for their users.
The number of first-time share sales on American exchanges has increased thanks to the IPO. The total US first-time shares have exceeded $21 billion, with $20.2 billion in 2024.
The auction-style order-taking method helped increase demand for Figma’s IPO. Some sources stated that in Figma’s offering, the company asked potential investors to specify the number of shares they wanted to purchase and at what cost.
The filings show that Field will continue to control the business with 74% votes after the IPO through his holdings of Class B shares, each of which has 15 votes.
In 2012, Evan Wallace founded Figma. Due to its browser-based interface, Figma quickly gained popularity among designers, replacing previous methods of collaboration involving sharing files individually.
Figma made revenue of $228 million and net profit of $44.9 million. Although its sales increased in 2024, the company reported a net loss of $732 million due to rising operating expenses.
Adobe, a software maker used by creative professionals, withdrew its offer to buy Figma after a dispute with regulators. It paid $1 billion termination fee later. Morgan Stanley, Goldman Sachs Group Inc., Allen & Co., and JPMorgan Chase & Co. led the deal.