Figma stock price has crashed and is hovering near its all-time low as concerns about its business growth and costs jump. After peaking at $142 following its initial public offering, FIG stock has tumbled to $21, erasing billions of dollars in value. Still, there are signs that the stock is a good buy ahead of its earnings.
Figma to publish its earnings on May 14
Figma stock price has been in a strong downward trend since its IPO as investors have remained concerned about the ongoing growth trajectory amid the ongoing artificial intelligence (AI) boom, which analysts believe will disrupt its business. There are also concerns about the company’s soaring costs.
Still, there are signs that the company’s business is doing well despite the disruption fears. The most recent results showed that its revenue jumped by 40% in the fourth quarter of last year to $303.8 million. Its annual revenue jumped by 41% to over $1.05 billion, with its international revenue growing by 45%.
The main challenge, however, is that the company is still losing substantial sums of money. Its annual loss jumped to over $1.3 billion as costs continued rising.
Looking ahead, the next key catalyst for the company will be its financial results, which will come out on Thursday this week. Wall Street analysts predict that the company’s revenue rose to over $316 million in the first quarter of this year.
The forward guidance for the second quarter is expected to come in at $329 million, while its annual revenue is expected to come in at over $1.37 billion, a 30% annual increase. Chances are that the real figures will be much higher than expected.
On the positive side, despite the ongoing fears of the artificial intelligence industry, there are signs that the company’s retention rate remains strong. The company had a net dollar retention rate of 136% in the fourth quarter, up from 132% in the same period a year earlier.
It ended the last quarter with over 13,861 paid customers with over $10,000 ARR and 1,405 with over $100,000 ARR.
Wall Street analysts are relatively upbeat about the company, with the consensus target being $43, up by 123% from the current level. Wells Fargo’s Michael Turrin is one of the most bullish analysts with a target of $42. Morgan Stanley’s Elizabeth Porter has a target of $45.
The company will likely restart its bull run in the coming days or weeks as investors start purchasing software companies in search for bargains.
READ MORE:This software stock is down 74%, but set for a sharp rebound
Figma share price technical analysis
Figma share price chart | Source: TradingView
The daily timeframe chart shows that the FIG stock price has crashed from its all-time high of $142 to the current $19. As a result, it has remained below the 50-day and 100-day Exponential Moving Averages (EMA).
On the positive side, the stock has formed a double-bottom pattern at $16.35 and a neckline at $32.7, its highest point in February this year.
A closer look shows that it has formed a falling wedge pattern, which is characterized by two descending and converging trendlines.
Therefore, the stock will likely have a strong bullish breakout in the near term, with the next key target to watch being at $34, which is about 65% above the current level. A move below the support at $16.3 will invalidate the bullish outlook.
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