A few years ago Adobe wanted to buy Figma for 20 billion dollars. There was a deal, and if that deal eventually went through, fine, but if the deal fell apart, 5% would be paid in cash to Figma — so 1 billion dollars.

And that deal did indeed fall apart. A regulator in the UK decided that it would be too monopolistic of a deal, that Adobe would become too powerful if they made that acquisition.

So Figma received that one billion, and three years later Figma went public.

Last year, in July, Figma had its IPO.

And the initial offered price — that’s an important number to remember — was set around 33 dollars.

What then happened is that the price, even before the IPO actually took place, shot up to 115 dollars.

So for some reason — and someone should explain this to me sometime — certain people get preferential treatment. They seem to be allowed to buy earlier than others, probably linked to investments. I’m not an expert on IPOs at all. Ever since I’ve started with stocks, few companies IPO’d in general.

So regarding $FIG – I was never able to buy on the first day, my trading app didn’t allow me to. That actually turned out to be a good thing, so it wouldn’t be temped (my initial target price was 18 dollars BTW; when I my “calculations” based on the prospectus, I thought Figma was worth around 12 billion)

That price, which was completely driven up, also completely collapsed afterward. It really went down in little shocks: from about 115 to 90, to 75, to somewhere in the 50s. Presumably related to early investors or employees selling off their stock in parts.

And eventually, in December, the price was hovering around 36-38 dollars.

I watched that very closely, because I’ve been following Figma as a company for a long time. And it’s the first time in my “investment” career (aka 3-4 years of doing stocks) I feels strongly about making a larger investment.

Professionally, as a designer, I use Figma every day.

I’ve also given courses in Figma, and I still do. Those courses mean that I’ve seen practically every corner of the user interface at least once.

When new features come out, I try them.

When something new appears — like Figma Weave, for example, a startup they acquired — I test it.

I’m on X / Twitter every day reading news and opinions, and Figma is often a topic.

I’m subscribed to the Figma subreddit, I follow the community, and I’ve also written a number of plugins for Figma.

Long story short: I’m a Figma nerd.

Regarding investing, I’ve come to believe that if, for example, you invest in medical stocks, you need to know what you’re doing. You need to know which medicines are coming to market, who is successful with their experiments, who is getting approvals, and so on. I’m probably explaining that poorly, but the field of medicine clearly isn’t my field.

The field that is my field is tech. But more specifically: what I really follow is design tools. How often does a design tool have an IPO? That almost never happens.

With the big stocks — the “big 7” — it’s hard to reason about why they go up or down.

A company like Microsoft, for example, has so many divisions and so many details that if you really want to follow that in depth, you’ll be pretty busy. You have Azure, the software division, hardware including Xbox… if you want to do value investing, there are so many areas you’d have to understand.

But Figma is basically just a design program. Now Figma is trying to build out a suite of apps with which they want to compete with Adobe.

That’s something I can reason about with what I know. I can relate their Sites product to Framer; I can track the evolution of their main Design product. I can see what value Draw offers vs. Adobe’s offering. I can see how Make stacks up to something like Lovable.

Adobe has a market capitalization of more than 120 billion dollars.

So why do I believe in Figma as a stock?

Adobe wanted to buy Figma for 20 billion, and right now — going back to that 33-dollar number — the stock price is currently hovering around what Adobe was willing to pay.

In fact, today it’s gotten a bit worse and is now around 29 dollars. The past five days has been terrible for the stock, going down 20%.

My bet would be that Figma is worth at least 40 billion within a few years. If it’s that, it would only be 1/3 of the market cap of Adobe (mind you, a company that has been around since the eighties).

That “within a few years” is important. Why not now? Why only in a few years?

Because it still needs to become clear what’s going to happen with the design tools market.

20 billion – what Adobe thought it was worth – is still a lot of money.

At the moment everyone is hyping AI tools, and many people are claiming that all design tools are going to disappear because they’ll be replaced by AI tools. Those AI tools are mainly code editors.

I personally don’t believe that’s going to happen. I believe that the design tool as a creative canvas will continue to exist.

And in the creative canvas space, there are few competitors.

Framer is a competitor that announced its own design mode, but that’s still at a very low level compared to what you can do with Figma. The tools in there are simply subpar.

That’s also why I keep coming back to Photoshop. I tried to be Adobe-free, and that attempt lasted exactly ten days.

Now I’m under deadline pressure, I need photo editing tools that work properly, and I don’t have time to learn Affinity — even though it’s now free and was acquired by Canva.

I don’t have time to learn a tool only to discover that the feature I need doesn’t exist. So I’m back on the Adobe train.

And there’s a reason Adobe software has such a large market cap.

For years, Adobe has been the gold standard for tens of thousands — maybe hundreds of thousands — of companies worldwide that need to do graphic design.

Packaging design. Color processes. Fashion design. Print workflows.

They have been dealing with things Figma hasn’t even thought about yet.

Figma is extremely bad at bitmap editing.

But where Figma is extremely good is digital product design.

And that fact, together with a few other strengths, makes me believe it can still evolve.

I foresee that if Figma becomes more complete as a suite — in logic, in what you can do with it — it could eventually overtake Adobe, or sit right next to Adobe.

Adobe has been stagnating for years when it comes to software evolution. A software package like Illustrator hasn’t fundamentally improved.

But the fundamentals — which aren’t always ideal — still work well for certain use cases. For example, editing vector art in Illustrator has long been considered the best approach.

There were things that simply didn’t exist in Figma until last year, when Figma Draw expanded things. And even now, if you do advanced vector work, there are still many features you’ll miss when working in Figma.

That said, I think Figma’s vector capabilities are underestimated. You can actually do quite a lot with them. People who default to Illustrator for all vector work are exaggerating, in my opinion. We drew all of the Obra Icons in Figma.

I think Figma is on the right path. Its vector engine is solid — it exists, it works — but it still needs major expansion.

Adobe is stronger in other areas: color management, bitmap editing in Photoshop, Lightroom capturing a large part of the photography market.

Adobe clearly captures different markets than Figma.

Figma captures digital product design. Adobe tried to capture that market with Adobe XD, but that didn’t really work.

So to conclude: is Figma worth what it’s worth today? Is Figma worth 20 billion? Will it become 30 or 40 billion?

I think so. So I think that if I invest a certain amount now, that amount could increase by 50%, maybe even 200%. Will it be worth 50% more? Double? We don’t actually know.

Will another product emerge that completely dominates and destroys the market? If that happens, it will probably take time. And then you can still sell at a loss. I don’t foresee the Figma stock going below $18.

So will I bet further on this now? I think so. I follow it closely enough to be able to sell if it stops making sense.

When would it stop making sense to invest?

The biggest risk to Figma is a competitor doing a better job.

There’s the category of AI tools — but as I said, I don’t believe in that threat.

Apps like Magic Path; people saying “I don’t need a design tool anymore, I’ll design with a Cursor or in the cloud.” I think that’s enthusiasm from trying out new tools. That’s not actual design.

Don’t get me wrong, these tools are useful for a specific type of work. I love “designing” with those tools when I know where I am going. But really I’m just prompting front-ends – that’s not design. That’s actually disrupting programming.

I don’t see the AI tools having a big impact on design tools. And I think if they do, Figma is smart enough to pivot in the right direction (as evidenced by Figma Make & Figma’s acquisition of Weave).

Another category that could poissbly overtake Figma is other design tools.

Framer is primarily a website builder, but their engine is very good. They’ve introduced a design mode where the underlying engine could become very powerful. With the right type of work, they could potentially sit next to Figma for part of the workflow.

So that’s a risk. With $100M in VC money and constant evolutions – they could be a major competitor.

Then there are smaller competitors, like Paper. Paper raised 4.2 million from Accel Ventures. They’re doing well, but they’re only a few people. That being said, Figma also started with two a few people. And they still managed to build a major product (albeit after spending 4 years in stealth).

If you have the community backing, and if you capture the zeitgeist with your design app, a lot can happen.

A perfect storm could happen when several things happen at once:

• a competitor gets good
• Figma stagnates
• Figma sentiment turns more negative

Designers are very sensitive to price increases. Designers are also very sensitive to anti-community decisions. By that I mean political decisions, or decisions that damage the community.

Community is a feeling. There’s the Figma Community — files, plugins — powered by an open API. And little by little, Figma has been chipping away at that openness.

They say: this part of the API is no longer available unless you buy Enterprise. More and more features are moving to org-level and Enterprise-level plans.

At first, when those tiers existed, this was limited. And even now it’s still limited. With a Figma professional subscription you can do about 90% of what you want. But the featureset of the more expensive seems to be expanding (e.g. features like Code Connect).

It’s actually my theory they could get away with 1 more price increase on the pro level, since the amount for an editor there is still rather low.

But overall there is a risk that if they choose to work on the wrong features, coupled with a price increase, community sentiment will turn towards other tools. I’ve been tracking their design decisions for 10 year now, and besides some questionable releases when it came to AI designs and UI3 (Config ’24) I generally feel like they’ve always been on the right track.

So — this is my analysis. I believe in it. If it drops further — say to 28 — I’ll buy more. If it goes up, I’ll wait. If I suddenly had a lot of money to invest, I’d probably take a bigger risk and put some of it into Figma shares.