Figma Inc. (FIG) shares exploded out of the gate—closing up 250% on their July 31st IPO debut and rising to a 270% gain by day two—but that momentum faded fast. The stock bottomed at $50 by October 1st, a 65% drop from peak. It briefly rallied over 40% into October 8th before resuming its slide.

Short interest surged to a post-IPO high of 15.4M shares ($900M notional), representing 35% of the float, making Figma one of the most shorted large-cap tech stocks of 2025. S3 data shows borrow costs rising above 12% into November, as shorts position ahead of the November 7 lock-up expiration, when a large tranche of insider shares becomes freely tradable. While that release excludes the ~54% of shares held by Figma’s five largest VC backers who are bound by a separate extended lock-up agreement, the upcoming unlock still represents a meaningful increase in float.

Post-IPO Whiplash: FIG jumped 270% in two days, then slid steadily to a $50 low by October 1st.

Bearish Positioning Peaks: Short interest hit 15.4M shares (35% of float) on October 16th, per S3 data.

Crowded & Costly: Borrow rate rose to 12%+ with 98% utilization, reflecting scarcity and conviction.

Lock-Up Catalyst: On November 7, all remaining “standard” IPO lock-up shares unlock, excluding VC-held shares under Figma’s extended agreement. Estimated at 140m shares, compared to 43.5m shares in current free float.

While the bulk of one-off lock-up risk will culminate with the ~140 million share unlock on November 7, longs aren’t entirely in the clear. The remaining ~200 million shares held by extended-lock-up VC insiders will unlock gradually over 2026. That prolonged drip of insider supply—representing ~50% of total shares outstanding—creates a persistent overhang. This structure also opens the door for 2026 to be an entry point for a fundamental FIG short, especially as borrow costs are likely to decline following the November release.

Figma’s post-IPO volatility is unfolding in direct competition with Adobe Inc. (ADBE)—the entrenched creative software incumbent that once tried to acquire it. Adobe remains dominant in core design workflows, but its AI transition has exposed key vulnerabilities: monetization friction, pricing elasticity, and platform trust. As noted in our May S3 analysis, Adobe’s notional short interest climbed 52% from its 2024 low, reaching $4B ahead of Q2 2025 earnings. That pressure has persisted: as of October 17, Adobe short interest stands at $3.6B, or 2.65% of float—up from 1.96% at the start of the year—as short sellers have added shares to maintain exposure despite a lower stock price, although the position is smaller than on the eve of Q2 earnings.

The ADBE shorts were right. Adobe shares have lagged since that buildup in positioning, with the stock down 17% since the S3 note was published May 14 and its forward multiple compressed into the mid-teens, while the S&P 500 is up 13% over that span. The concerns flagged in May—around discounting, user churn, and backlash to Adobe’s AI terms-of-service—have played out in price. While Figma and Adobe cater to different investor camps, with ADBE increasingly appealing to value investors while Figma is more likely to appeal to growth investors, their fates remain linked. Both are navigating the same structural challenge: how to harness AI without accelerating pricing pressure, shrinking their addressable user base, or watching AI-native tools bypass them entirely.

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