Figma (FIG), the design and coding software company, saw its stock plummet 5% in pre-market trading on Thursday, as investors began to reassess the company's valuation following its recent blockbuster initial public offering (IPO). The sharp decline comes after Figma's shares more than tripled on their first day of trading, catapulting the company's market capitalization to over $59 billion.

The pullback in Figma's stock price reflects growing concerns about the sustainability of its lofty valuation. Despite the company's strong growth trajectory and potential in the artificial intelligence (AI) space, some analysts argue that the current market cap, which has settled around $44 billion, may be overextended. At this valuation, Figma is trading at over 44 times its projected 2025 revenue, assuming a continued quarterly revenue growth rate of 10%.

While Figma boasts impressive credentials, including its use by 95% of Fortune 500 companies and promising AI-driven features like Dev Mode and First Draft, investors are now weighing these factors against the stock's rapid price appreciation. The company's co-founder and CEO, Dylan Field, remains confident in Figma's technological edge, particularly in graphics engines. However, as the market digests the implications of Figma's valuation and its position in the evolving AI landscape, investors appear to be taking a more cautious stance, leading to today's significant price correction.