I've been covering tech IPOs since the frothy days of 2021, and I've developed a certain cynicism about the whole process. So imagine my surprise when Figma announced its IPO price range between $25 and $28 per share. My first thought? Wait, that actually makes sense.
This isn't how the script usually goes.
The story took an even more interesting turn when I discovered some Reddit user had already done the math—a discounted cash flow analysis that landed almost precisely within Figma's official range. The anonymous analyst's fair value estimate: $27.50 per share. The official range: $25-$28.
Coincidence? Maybe. But in the world of tech IPOs, seeing bankers and retail investors arrive at the same valuation is about as common as finding a unicorn in your backyard. (The mythical creature, not another billion-dollar startup.)
Look, we've all seen how these things typically play out. Tech IPOs generally come in two distinct flavors: either absurdly overvalued companies trading on vibes and hand-wavy TAM projections, or deliberately underpriced offerings that pop 50% on day one—effectively transferring wealth from the company to institutional investors who flip the shares faster than pancakes at a breakfast buffet.
Figma's approach suggests a third way: what if we just... priced things reasonably?
The Reddit analyst wasn't engaging in financial fantasies. Their assumptions were downright boring—revenue growth gradually slowing from 46% to a terminal rate, margins improving to Adobe-like levels around 30%, factoring in cash and IPO proceeds. Standard DCF stuff that any first-year analyst would recognize.
So what's happening here? Several possibilities come to mind:
The efficient market hypothesis occasionally works (even a broken clock is right twice a day) Bankers learned some humility after the 2021-2022 tech wreck left so many IPOs underwater Someone at Figma's underwriter is scrolling Reddit during lunch breaks Pure cosmic coincidence
I'm betting on option two. After watching companies like Toast, Allbirds, and countless others trade well below their IPO prices, underwriters have strong incentives to be more disciplined. Nobody wants to be the bank that priced too aggressively only to watch their client's stock languish for months afterward. Bad for business, bad for reputation.
There's also the Adobe factor.
When Adobe tried to acquire Figma for $20 billion in 2022 (before antitrust regulators stepped in), it established a crucial reference point. When a strategic buyer with perfect insider information is willing to pay that much during a market downturn... well, it creates a pretty credible ceiling for valuation discussions.
What happens next will be telling. If Figma pops significantly on its debut, we'll hear the usual complaints about bankers "leaving money on the table." If it trades flat or drops, maybe—just maybe—we'll acknowledge the bankers got it right for once.
The problem with reasonable pricing? It's kinda boring. Nobody writes passionate LinkedIn posts about IPOs that behave normally.
For those considering an investment, the real question isn't about the IPO price—it's whether Figma can deliver on the assumptions baked into these valuation models. Can they maintain strong growth while expanding margins? Will they successfully fend off Adobe, who must be feeling more than a little salty about the failed acquisition? Can they expand beyond design tools into a broader platform?
I remain skeptical that this represents any fundamental shift in how IPOs are priced. The system has too many structural incentives pushing toward optimistic valuations. Investment banks make more money when deals are larger. Founders and early investors want to maximize their returns. Figma might just be that rare case where multiple factors aligned to produce... reasonableness.
Still, it's refreshing to see a tech IPO where the conversation centers on actual cash flows rather than nebulous concepts like "founder vision" or "disruption potential." Maybe financial gravity is making a comeback.
At least until the next AI company goes public at 100x sales. Some things never change.
