Morgan Stanley Cuts Figma Price Target to $38 Despite 46% Revenue Growth

Morgan Stanley lowered its price target on Figma (NYSE: FIG) to $38 from $44, maintaining an Equal Weight rating following the company's first-quarter results. The reduction comes despite a second consecutive quarter of accelerating revenue growth of 46% year-over-year, creating an unusual tension between strong performance and cautious analyst sentiment.

Rating Change

Before the cut, the price target was $44 with an Equal Weight rating. After the cut, the target is $38 with the same rating.

Analyst Rationale

Morgan Stanley analysts believe that the strong revenue growth does not fully offset rising risks from AI competition. AI-powered design tools could threaten Figma's market share in the long run, justifying the conservative valuation.

Context

Other analysts, such as Piper Sandler, have mixed views. Some see the sustained growth as justifying a higher valuation, while others agree with Morgan Stanley on competitive risks. Figma's stock has fallen about 12% year-to-date.

What to Make of It

Morgan Stanley's price target cut shows that even strong revenue growth may not be enough to dispel fears of technological competition. Investors should closely monitor developments in the AI-powered design tool market.