Shares of Figma plunged 4.4% to $24.14 on Wednesday, extending a brutal two-day slide of over 12%, after Google unveiled a sweeping upgrade to its AI-powered design tool that lets anyone create professional app interfaces by simply describing them in plain English. The update, dropped on March 18, sent shockwaves through the design industry and opened Figma's stock 8.8% lower the following morning.
The stock is now down roughly 85% from its post-IPO peak , making this the sharpest stretch of selling in over a month.
• Google Shipped a Free Rival to Figma's Core Product. The March 2026 update is Google's biggest yet — a complete redesign into an AI-native infinite canvas where ideas grow from early sketches to working prototypes without switching tools.
It is still completely free. That price tag — zero — is what terrifies investors. The free tool competes with paid creative suites and could shift AI-driven design workflows away from Figma's platform, stoking fears over pricing power.
• Figma's Growth Story Doesn't Erase the Threat. Figma reported 41% year-over-year revenue growth in 2025 , and guided for about $1.37 billion in 2026 sales — well ahead of the $1.29 billion analysts expected. But the market is looking past those numbers. With an enterprise value of nearly $17 billion, Figma trades at 13 times this year's sales and 124 times EBITDA (a measure of operating profit before accounting adjustments) — a premium that demands flawless execution.
• The Real Danger Isn't Losing Current Customers — It's Losing Future Ones. Google's tool now offers non-designers a free path to creating interfaces without learning Figma at all — the real competitive threat is intercepting the next generation of users before they ever adopt Figma. Figma CFO Praveer Melwani recently argued that while AI makes it easy to go from an idea to code, speed is useless if you aren't "building the right thing." That's a reasonable defense for enterprise teams, but it may not hold with startups and solo builders who now have a zero-cost alternative.
• Wall Street Was Already Cautious Before This Hit. The stock carries a consensus Buy rating with an average price target of $33.40 , but Stifel's analyst maintained a Hold even after hiking his target to $30, posing the existential question: "How much does UI matter in a world where agents do the work?"
At $24.14, the market is pricing in real damage. The question is whether Figma's collaboration tools and enterprise lock-in can withstand a world where Google gives away the first draft for free.