🙊 Figma employees hit payday, but so did the IRS

Figma went public on July 31, 2025. Shares priced at $33 and closed their first day at $115.50, giving the company a nearly $70 billion valuation. It was one of the most impressive IPOs in years.

But IPO highs don’t always last. On September 4th, Figma released its first earnings as a public company. Shares plunged about 18% in after-hours trading. That must have been a tough sight for employees.

Subsequently, on September 5th, the first early lockup expired. At 9:30 am, employees could finally sell their stock. Nearly 12 million shares traded at around $54, showing just how much supply hit the market all at once.

Employees sold, but the IRS won

The S-1 showed that at IPO, Figma had:

• 23,057,048 Class A stock options with a weighted-average strike of $9.77.
• 811,896 Class B stock options with a strike of $23.19.

So when lockups expire, those unexercised options often flood the market. And here’s the catch: when employees sell without exercising earlier, their gains are taxed as ordinary income, at rates around 53% in California.

If they had exercised earlier and qualified for long-term capital gains, the rate would be closer to 37%. That difference of 16 percentage points applied to millions of shares adds up fast.

$163 million went to the IRS

Let’s do the math at September 5th's $54 price:

• Average gain per share = $54 − $9.77 = $44.23
• Extra tax paid without LTCG = 16% of $44.23 = $7.08 per share
• Multiply across 23 million options = about $163 million in additional taxes employees paid by waiting until IPO.

That’s not hypothetical. That’s real money gone.

A 2021 hire under real conditions

Take a Figma engineer who joined in 2021 with 50,000 ISOs at a $3 strike.

• Pre-tax gain at $54 = ($54 − $3) × 50,000 = $2.55M
• If never exercised until sale: taxed at ordinary income (~53%) → ~$1.27M net
• If exercised early and held for LTCG (~37%): $~1.64M net

Now that’s still a great outcome, as the vast majority of startup employees will never go through an IPO. But that’s close to $400,000 lost to taxes simply because employees didn’t properly plan. Even after the stock fell by more than half from IPO highs, the tax difference could be life-changing.

The lesson to take away

Figma’s stock drop wasn’t a surprise. IPOs are volatile, and employee unlocks almost always add selling pressure. What makes the volatility sting more is when employees haven’t planned around taxes.

• Those who waited to sell are paying the highest tax rates.
• Those who exercised early and qualified for LTCG are keeping much more, even at the same sale price.
• The stock price moves with every headline. The tax treatment is decided years in advance.

A simple playbook that travels well

1. Map your timelines early: IPO, blackout windows, unlocks, and ISO/83(b) holding periods.
2. Run scenarios at multiple prices: don’t just assume IPO day levels.
3. Consider planning your exercise strategy: decide whether early exercise, partial exercise, or financing makes sense.
4. Work backwards: if your goal is long-term capital gains, lock in the dates you must meet.
5. Review often: every funding round and 409A update changes the math.

The bottom line

On September 5th, Figma employees finally got to sell, and many paid the steepest possible tax bill. The difference between ordinary income rates and long-term capital gains cost them hundreds of millions.

If you’re at a company preparing for an IPO, don’t make the same mistake. The earlier you plan, the more you can save.

👉 If your company is heading toward a public listing and you want to maximize your equity, don’t hesitate to get in touch. We can help you build a strategy so when the markets move, you’re ready.