Is Figma an IPO trap?

When Figma (FIG) finally hit the NYSE on July 31, 2025, the media wasn't just hopeful, it was euphoric. After regulators blocked Adobe’s $20 billion buyout, the narrative shifted: Figma was a "standalone giant" destined for glory. Influential voices like Scott Galloway and Ed Elson on the Prof G Markets show fueled this positive climate, framing the debut as a triumphant return for tech IPOs.

The reality? It was a "Hype Hole" that swallowed retail investors whole.

The Mechanics of the Crash

Figma priced its IPO at $33, but thanks to a tiny float (only 7–9% of shares) and being 40x oversubscribed, the stock "popped" 250% to close day one at $115.50. This gave Figma a staggering $68 billion valuation, triple what Adobe was willing to pay.

Today, the chart tells a different story. The stock has cratered nearly 85% from those highs, currently languishing near $20.

The Supporters & The "Scandal"

The IPO was engineered by heavyweights Morgan Stanley, Goldman Sachs, and J.P. Morgan. While they celebrated the "success," critics like venture capitalist Bill Gurley slammed the pricing as an "intentional mismatch." By pricing the stock at $33 despite massive demand, the banks ensured their institutional clients, who were allocated shares at the IPO price, could flip them for instant 150–250% gains. Meanwhile, retail investors buying at the $100+ open were left holding the bag.

"They refuse to match supply/demand ... the outcome is expected & fully intentional."

Bill Gurley clearly claimed!

The Bad Reputation

The "scandal" isn't just the price drop; it's the insider exit. While the public was locked in, certain "early lockup" provisions reportedly allowed insiders and employees to offload shares at $80 in late 2025, long before the stock hit the $20 floor.

Figma remains a great product, but as an investment, it has become a cautionary tale of how Wall Street and media hype can turn a "unicorn" into a wealth-destruction machine.