Figma (FIG) shares tumbled 5.11% in pre-market trading on Friday, extending the sharp decline from the previous session when the stock plummeted nearly 20%. The continued sell-off comes in the wake of the design software company's disappointing second-quarter earnings report and subsequent analyst downgrades.

Figma, which went public in July in one of the most celebrated IPOs of the year, reported second-quarter revenue of $249.64 million, surpassing the consensus estimate of $228.2 million. However, investors were particularly concerned about Figma's decelerating growth trajectory. The company's Q2 year-over-year revenue growth of 41% marked a slowdown from 46% in the first quarter, and management's guidance for the third quarter projects further deceleration to 33% growth.

Following the earnings release, several analysts adjusted their forecasts and lowered their price targets for Figma. Bank of America Securities maintained its "neutral" rating but reduced its target price from $85 to $69, citing the company's decelerating growth trajectory. Similarly, Morgan Stanley cut its price target to $70 from $80. These revised outlooks have contributed to the bearish sentiment surrounding the stock.

Despite the current challenges, some analysts remain optimistic about Figma's long-term prospects. The company's strong position in the $36 billion digital design industry, along with its plans to monetize AI features starting in fiscal year 2026, could potentially drive future growth. However, in the near term, investors appear to be recalibrating their expectations for this newly public company in the face of slowing growth and increasing competitive pressures in the AI-driven design software market.