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Figma (FIG 3.88%) was one of the hottest IPOs of the year on July 31, surging out of the gate from a listing price of $33 to an intraday peak above $142 the following day. However, since then, Figma, which makes cloud software for user interface and user experience (UI/UX) design, has struggled, falling on concerns about valuation, on forecasts for declining profits as it invests in artificial intelligence (AI) products, and as larger rival Adobe has made progress with its own AI products. The stock is now trading at a post-IPO low under $50, but it recently gave investors one reason to keep faith in the stock: It just acquired an AI start-up. Here's what you need to know. Figma makes another bet on AI On Thursday, Figma announced its acquisition of Weavy, which it describes as a platform that brings generative AI and professional editing tools together. It did not say what it paid, though estimates peg the value at around $200 million. Now renamed Figma Weave, the new product will complement the company's tools for building out image, video, animation, and other forms of media. Weavy allows users to choose from a wide variety of AI models, including OpenAI's Sora video generation platform, giving users a broad range of design choices and the ability to remix and refine them down to small details. Weavy is less than a year old, but Figma touted the strength of its community and called Weavy "a tool that is just a joy to use." Is Weavy a game changer for Figma? On its own, Weavy is unlikely to be a difference-maker for Figma. In fact, the stock slipped on Thursday, seemingly in response to the news, and amid a broader sell-off on concerns about overspending in AI across the industry. However, the Weavy acquisition is just one component of a larger strategy to harness the power of AI, as the company launched a number of AI-based products in the second quarter. Software companies like Figma are in the land grab phase of AI, and it's important for them to roll out products to land new customers while investing in this technology. Delaying could be costly, and it could lead Figma to fall behind a competitor like Adobe or even an AI start-up. Looking at it that way, the Weavy acquisition looks like a smart move, and Figma's aggressive approach in AI should pay off over the long run. Investors might have to be patient, but the company is executing well, despite the recent price action in the stock.
