To The Moon

This article serves as a supplemental analysis to the previous piece, "Figma's Q3 2025 Earnings: AI Fuels Growth Amid Post-IPO Volatility," focusing specifically on the potential short-term fluctuations in FIG's stock price due to upcoming lock-up expirations and market dynamics.

While Figma's Q3 earnings report was positive, the impending lock-up period expirations could indeed trigger significant stock price volatility over the next few weeks to a month, particularly in the current market environment, where insider and early investor selling pressure should not be underestimated. Below, I'll combine the latest data and analysis to share my independent judgment.

Lock-Up Period Details and Potential Impact

Based on reliable sources, Figma's IPO lock-up period is primarily 180 days, starting from the July 2025 IPO, with the main expiration date around late January 2026. This means a large volume of shares (including those held by employees and investors) will become eligible for sale at that time, potentially leading to substantial sell-offs, similar to the 20-30% pullbacks seen in other post-IPO companies, such as Uber or Snowflake, after their lock-ups ended.

However, there are indications that portions of the lock-up may expire earlier:

• Some reports suggest that, within days of the Q3 earnings release (November 5), certain lock-ups could lift. Specifically, around November 7, a portion of shares (approximately 25% of employee stock) may become unlocked, similar to the partial expiration that occurred following Q2 on September 4.

• Additionally, on August 30, the company signed an agreement with holders of approximately 54.1% of shares to extend their lock-ups, which could mitigate short-term pressure, but the remaining shares' unlocks will still create uncertainty.

This staggered lock-up approach is a common IPO strategy to avoid a single massive market impact. But over the next few weeks, if millions of shares hit the market, combined with the stock already down over 60% from its IPO highs, selling pressure could amplify swings. Recent discussions on X also highlight that lock-up expirations may spark volatility, urging investors to remain cautious. Historically, such events often result in short-term oscillations of 10-20%, especially if the broader market (like tech stocks) remains unsteady.

Today's Stock Update and Market Reaction (As of November 6)

Based on the after-hours trading, the stock rose from a regular close of $44.01 to around $47 (+6.7%). Today's opening price is expected in the $46-48 range, with potentially elevated volume as the earnings catalyst continues to play out.

The overall market reaction remains positive: The Q3 revenue beat, rising AI adoption rates, and raised full-year guidance have kept analysts optimistic (consensus target price around $67-71). However, if partial unlocks begin on November 7, we could see a "sell the news" dynamic in the short term, causing the stock to give back some gains. If the day opens high and walks lower, volatility could spike to 5-10%.

My Independent Analysis and Forecast

In the short term (over the next few weeks to a month), Volatility is indeed high. The lock-up period acts like a "ticking time bomb," potentially increasing supply and pressuring the price downward, especially around Thanksgiving when market liquidity is lower. With the current P/S multiple at about 15x (relatively undervalued), concentrated selling could test support levels around $40-42. But the positive earnings and AI momentum provide a buffer, creating rebound opportunities—similar to the 20% drop after the September Q2 unlock, which stabilised quickly.

Long-term: I remain bullish on Figma. Enterprise customer expansion (NDR at 131%) and strong cash flows ($1.6 billion in cash, debt-free), coupled with AI transformations in the design tools market, support 40%+ growth. Post-lock-up, stocks often stabilise and climb within 3-6 months as uncertainty clears.

@TigerWire