RBC Capital Markets has trimmed its price target for Figma to $22 from $28 following the company's annual Config event in San Francisco, even as analysts acknowledged the design software firm's artificial intelligence strategy is starting to take shape.
The investment bank maintained its sector perform rating, suggesting the stock is expected to move in line with the broader market. The price target cut reflects a mix of cautious optimism about Figma's product direction and a tougher valuation environment for software stocks broadly.
What Figma Unveiled at Config
At Config, Figma demonstrated how it is expanding its core design platform beyond traditional screen-based design into areas like code generation, motion design, and AI-assisted workflows. The company is positioning itself as a broader creative toolkit rather than just a design tool for user interfaces.
RBC noted that the event helped clarify how Figma plans to widen its “canvas” and sell that expanded capability to a wider audience beyond designers. This includes developers, product managers, and other stakeholders who collaborate on digital product creation.
However, the key question for investors remains how Figma will monetize these new capabilities. RBC believes the company is transitioning from a simple per-seat subscription model to what it calls a “seat-plus-consumption model.” Under this structure, customers would pay a base subscription for access to the platform, plus additional usage-based fees when they leverage AI-powered features.
Why the Price Target Was Cut
The reduction in Figma's price target is not primarily about the product itself. Instead, RBC pointed to “peer multiple compression” — a term that means investors are currently willing to pay fewer dollars for each dollar of revenue generated by comparable software companies.
When valuation multiples shrink across an entire sector, it mechanically lowers price targets even if a company's underlying business is improving. This dynamic is especially relevant for Figma as it navigates a shift in its revenue model.
The seat-plus-consumption approach is a double-edged sword. On one hand, usage-based fees for AI tools could expand Figma's revenue pool if customers find the features essential. On the other hand, consumption-based revenue is inherently less predictable than fixed subscription fees, at least until customer usage patterns stabilize.
This unpredictability can lead investors to assign a lower valuation multiple to the stock, keeping price targets under pressure even as the product lineup strengthens. The broader market context also matters: rising interest rates and inflation concerns have weighed on high-growth tech stocks, as seen in recent Big Tech slumps.
What It Means for Investors
For everyday investors, the key takeaway is that Figma's long-term story may be improving, but the near-term financial picture remains uncertain. The company is betting that AI features will become indispensable to its users, driving both adoption and additional revenue. But until that consumption revenue proves repeatable and predictable, the stock may struggle to command the same valuation multiples it once did.
RBC's $22 target suggests the stock could still have upside from current levels, but the path is not straightforward. Investors should watch for signs that Figma's AI tools are gaining traction and that usage patterns are becoming more consistent. The company's ability to communicate this progress in future earnings reports will be critical.
The broader software sector is also facing headwinds from valuation compression, which affects not just Figma but many of its peers. This environment rewards companies that can demonstrate clear, repeatable revenue growth and profitability — qualities that Figma is still working to prove with its new model.
In the meantime, the Config event provided a clearer picture of Figma's product vision, but the financial payoff remains a work in progress. Investors will be watching closely to see whether the company can turn its AI ambitions into a reliable revenue engine.
