Figma stock drops 11% after Google releases vibe design product Stitch

Figma’s downward slide this year, driven by concerns about artificial intelligence, intensified over the past two days after Google intoduced an AI-powered design product.

On Tuesday, Google released a new product in beta called Stitch, which lets users enter a prompt to create a design for their projects. Google claims the feature is a “design agent” that can give real-time design critiques, and that responds to voice. 

Google isn’t charging for Stitch, nor does it make promises about the availability of the service. But with Wall Street on edge regarding all potential threats from AI, Figma is getting punished.

Shares of Figma dropped 8% on Wednesday followed by a decline of more than 3% on Thursday. The stock is down about 35% this year, tumbling alongside a broader slide in the software industry.

A Figma representative declined to comment.

Figma went public in July, assuring investors the company was positioned to benefit as more users turn to AI products for design. Adobe attempted to buy Figma in 2023 but ultimately terminated the planned $20 billion deal due to regulatory hurdles.

Adobe shares are down about 4% over the past two days.

Should Google launch its new feature to paying customers in the future, it could represent an effort to own more of the product design workflow and to keep users inside its enterprise ecosystem. The company has deep pockets, massive distribution, and a willingness to bundle products.

Google didn’t immediately respond to request for comment.

In October, Google Cloud and Figma announced an expanded partnership that involved more of Google’s generative AI technology being added into Figma’s platform. The Figma Make tool allows people to type in a few words and have AI models from Anthropic and Google.

— CNBC’s Jordan Novet contributed to this report.

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