Figma’s IPO started at around $90, with an initial price of $33 per share. This was highly sought after, with a 40:1 demand, showing strong interest from investors. It began trading at about $85 and peaked at $93.50. The IPO raised around $1.2 billion, giving the company a value of $19.3 billion. This is nearly equal to Adobe’s earlier $20 billion acquisition bid. This year, Figma expects to generate about $1 billion in revenue, with projections of reaching $1.5 billion next year. Figma is a cloud-based platform that enables collaborative UI/UX design, prototyping, and developer interactions. Its features include Figma Design for design work and FigJam for brainstorming, along with Dev Mode, which connects design elements with code. At a share price of $85-$90, Figma’s market capitalization is around $50-$55 billion, which is 30 times next year’s projected sales. Similar public companies include Workday and TE Connectivity, while private firms at competitive valuations include Databricks and Anthropic. With Figma’s IPO starting near $90 after an initial pricing of $33, there is notable volatility. The trading halt at $93.50 confirms this, indicating that options premiums will be very high due to increased implied volatility. For traders, strategies like selling covered calls or cash-secured puts could be more appealing than purchasing pricier options. Figma’s valuation, nearly 30 times the expected sales for next year, is significant in today’s market. Reflecting on the tech correction in 2022 and the software valuation decrease in early 2025, high valuations often face downward pressure. This suggests that bearish strategies, like buying put spreads for risk management, might be wise to guard against a potential price drop toward peer valuations. On the flip side, the 40-to-1 oversubscription indicates strong institutional demand. We recall how stocks like Snowflake maintained high valuations for months after their 2020 IPO, supported by growth narratives. Traders believing this momentum will continue might use bull call spreads to benefit from potential upsides while controlling costs. A key event to watch is the IPO lock-up expiration, which usually happens 90 to 180 days after the IPO. Historically, this event increases share supply in the market, often leading to a stock price decrease. Recent tech IPO data shows an average stock decline of 6% around the lock-up expiration, presenting a trading opportunity. Given the tension between high valuation and substantial demand, significant price fluctuations are expected. This environment is ideal for volatility strategies like long straddles or strangles, which can profit from large price moves in either direction. However, the elevated implied volatility means the stock must shift significantly for these positions to be profitable.

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