Performance unable to support high valuation, Bank of America Securities downgrades Figma (FIG.US) target price to $69.

Bank of America Securities has released a research report, reiterating a "neutral" rating on Figma (FIG.US), but lowering the target price from $85 to $69 to reflect a slowdown in growth. Bank of America Securities stated that Figma did not achieve significant growth in the second quarter, which was expected as their model had already anticipated this back in early July. Some key indicators to note include: quarterly revenue growth of 9%, within the range of 8% to 13% for the past two years; and a 7% growth rate in customers contributing annual revenue of over $100,000, lower than the 13% in the second quarter of 2024. Bank of America Securities mentioned that the monetization of Figma's artificial intelligence (AI) features is expected to start in the 2026 fiscal year. Although the company's second-quarter revenue increased by 41% year-on-year, slower than the 46% in the first quarter, these figures do not cover the impact of AI features embedded in Figma and FigJam core products. Figma is expecting a 33% revenue growth in the third quarter, which also does not account for the impact of AI monetization. Bank of America Securities believes that AI monetization may drive performance improvement in the 2026 fiscal year. It is worth noting that the 9.1% profit margin guidance for the 2025 fiscal year is 30 basis points higher than Bank of America Securities' model, indicating that the launch of efficient products could lead to an increase in profit margin. Overall, Bank of America Securities still believes that Figma has a strong market position in the $360 billion digital design industry and is likely to continue to expand its market share. This is due to its strong competitive advantages, including: 1) 13 million monthly active users and 450,000 paid customers; 2) rich collaboration features; 3) comprehensive services covering whiteboard drawing, development, websites, social media, and vector graphics; and 4) powerful generative AI features. Given that Figma's stock price carries a significant premium compared to large software companies, Bank of America Securities believes that recent upside potential is already reflected in the stock price. As of Thursday's closing of the U.S. stock market, Figma plummeted by 19.92% to $54.56, due to the market's disappointment with the company's first financial report since its IPO in July.