Figma, Inc. (FIG) Is Expensive At $33, Says Jim Cramer

We recently published 11 Stocks Jim Cramer Discussed As He Revealed How To Become ‘King’ Of AI. Figma, Inc. (NYSE:FIG) is one of the stocks Jim Cramer recently discussed.

Figma, Inc. (NYSE:FIG), the latest IPO to hit the market, went public on the day this show was aired. Its stock jumped by a whopping 250% on the day that the shares started to trade on the market. However, since the peak post-IPO close, Figma, Inc. (NYSE:FIG)’s shares have dipped by 35%. In this context, Cramer’s words as the shares started to trade are quite important:

“It is expensive at 33 versus where Adobe tried to buy it.

“[On how they’ve got a lot of selling shareholders] Right, and I think that in itself is usually a red flag. They expect to bring 360 million from the deal but roughly two-thirds are going to existing shareholders. Which I find is a really large cash out.

“Netflix uses it, Duolingo uses it, Uber uses it, JetBlu, 95% of the Fortune 500 use it. And, if you have a subscription to Adobe it’s much more expensive than Figma. Figna’s a very good buy. This is Figma versus Adobe just so everyone knows.

“And I urge people to, if you put in market orders, it’s gonna be like two thousands, you will be crushed. Please put in a limit order. Don’t worry if you don’t get it. This is one where I want people to exercise caution.

The CNBC TV host proceeded to discuss Figma, Inc. (NYSE:FIG) later during the day in Mad Money. Here is what he said:

“Somehow, Figma captured the zeitgeist of the entire joint, no, the entire market… And do you know why that happened? Was it the Fed? Was it the president? Was it earnings? No, it happened because of Figma. This market went down because of Figma. Why? Because valuation matters. What matters to this market is to be reasonable, and we weren’t today. Today was dominated by euphoria. And guess what? Euphoria is bad for business…

Now, I’m not disparaging Figma here. This is not some profitless company. It makes money, it grows fast, consistently. I like the product, used by everybody… But there’s a problem here, problem with Figma stock. The price made no sense whatsoever. It’s wildly inflated because it doesn’t make that much money. In fact, it makes so little that I can’t even use a price-to-earnings multiple that I used for Microsoft and Meta.

Home improvement tools

Valuation is irrelevant when we talk about Figma, irrelevant. How do we value it then? There’s really only one way. You have to judge it on a price-to-sales basis… The Figma deal mattered even more than the two giants because it’s the worst possible sign of froth. I hate it… What goes up must come down, okay?”

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.