Figma (FIG) Stock Falls 8% After Google Launches Stitch AI Design Tool

TLDR

• Figma stock dropped ~8% on Wednesday after Google announced new updates to its Stitch AI design platform
• Google is pitching “vibe designing” — a prompt-based approach to UI design and front-end code generation
• Stitch integrates with Google Workspace tools like Docs and Drive, targeting teams already in Google’s ecosystem
• Figma reported $1.06B in 2025 revenue, up 41% year over year, but net losses widened to $1.25B
• The stock is now trading down roughly 80% from its post-IPO high of $142.92

Figma’s stock has had a rough stretch, and Wednesday didn’t help. The stock fell around 8% after Google announced a set of new updates to Stitch, its AI-powered UI design tool. On Thursday, FIG was still trading down about 5% as of midday in New York.

Figma, Inc., FIG

The drop came quickly. Investors didn’t wait for side-by-side product comparisons — Google’s name alone was enough to move the market.

Stitch was already on Figma’s radar, but Wednesday’s announcement pushed the competitive threat into sharper focus. Google Labs framed the updates around a new concept it calls “vibe designing” — essentially using natural language prompts to generate polished UI designs and front-end code, without starting from a wireframe.

Stitch also added templates covering categories like SaaS dashboards, health apps, entertainment, and utility tools — areas that directly overlap with Figma’s customer base.

Why Google’s Move Matters

The concern isn’t just the product. It’s the ecosystem behind it. Stitch integrates with Google Docs, Drive, and Workspace — tools already used by millions of teams daily. That reduces the switching cost for businesses that might consider moving away from Figma.

Google also has a track record of scaling products fast. That history gives investors reason to take the announcement seriously, even if Stitch is still early-stage.

Figma CEO Dylan Field addressed market volatility in a February CNBC interview, saying: “I think volatility is probably good at strengthening companies long-term.”

Figma’s Numbers Tell a Mixed Story

Figma’s financials are a study in contrasts. The company reported $1.06 billion in revenue for 2025, up 41% year over year. Net dollar retention came in at 136%, meaning existing users spent 36% more on the platform compared to the year before.

But losses are growing fast. Net losses hit $1.25 billion in 2025, up from $732 million in 2024. Rising stock-based compensation and operating expenses are driving that gap wider.

The stock initially popped after the Feb. 18 earnings report, helped by a forecast of 38% revenue growth in Q1 2026. But those gains faded quickly.

FIG is currently trading around $24.50 — well below its IPO price of $33 per share, and nearly 80% off its post-IPO high of $142.92. The stock’s 52-week range sits between $19.85 and $142.92.

At a price-to-sales ratio of around 13, the valuation isn’t cheap, but it’s more competitive than many high-growth SaaS peers at similar revenue growth rates.

The stock hasn’t revisited its early February low, which some analysts read as a potential floor forming.

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