CNBC’s Jim Cramer reviewed Thursday’s market action and said that Figma‘s initial public offering overshadowed strong earnings results from tech giants Meta and Microsoft, warning that the design software company’s opening pop is a sign of froth.
“You have to hope that Figma’s a one-and-done bout of enthusiasm. It just can’t be the norm,” he said. “And as someone who brought a company public during the heyday of 1999, I know what I’m talking about…We don’t want to go back to the bubble territory.”
Figma shares more than tripled during its market debut and continued to soar in extended trading. Initially priced at $33, the stock finished the day up 250% to hit $115.50. Figma’s software helps create interfaces for website and applications, and its customer base includes Google, Microsoft, Netflix and Uber.
Cramer said there is an issue with Figma stock, not Figma the company. The software designer turns a profit, is growing fast and has a great product, he said. But the price of the stock is “wildly inflated” because it doesn’t make enough money. He pointed out that Figma’s price-to-sales ratio is much higher than that of both Meta and Microsoft, two of the largest companies in the world.
Cramer wondered if Thursday marked a new phase of the bull market, one of “ludicrous valuations,” but indicated he hoped that was not the case. It’s better that Wall Street focus on quarterly results, Cramer continued.
“At the end of the day, I hope we can go back to focusing on earnings rather than getting more IPOs like Figma,” Cramer said. “We got to put this genie back in the bottle.”
Figma did not immediately respond to request for comment.
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Disclaimer The CNBC Investing Club Charitable Trust owns share of Meta, Microsoft and Google.
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