Figure AI has recently sent cease-and-desist letters to at least two brokers operating in secondary marketplaces, highlighting its commitment to controlling the sale of its stock. The company hasn’t officially authorized these brokers to sell its shares. It enjoys a long and proven track record of successfully addressing such unauthorized sales. This move is a demonstration of Figure AI’s efforts to protect its valuation. It wants to shore up its stock price as demand for its publicly traded shares swells.
Brett Adcock, the founder of Figure AI, claims that the company has become “the #1 most sought-after private stock in the secondary market.” The firm is seeking to raise $1.5 billion at the eye-popping $39.5 billion valuation. To safeguard this grand monetary blessing, they’re on a hair trigger against any illicit speculative trading.
Figure AI’s valuation increased 15 times from $2.6 billion just in February 2024 to a mind-boggling $39.5 billion. This big jump has piqued the curiosity of current shareholders, some of whom are anxious to unload their shares. These days most are trying to do it at prices undercutting the startup’s expected valuation by a wide margin. All of these factors have led to extreme stress in the secondary market. Figure AI’s shares need explicit board authorization for every trade made on its shares, sharp limiting trading activity.
In response to concerns raised in a recent article regarding its trading practices, Figure AI threatened legal action due to what it termed “many inaccuracies.” The company insists it will still fight against bad third-party brokers that might undermine its hard-fought market plans.
A spokesperson for Figure AI stated, “This year, when we discovered an unauthorized third-party broker was marketing Figure shares without approval from the Figure Board of Directors, the company sent a cease and desist asking the unauthorized broker to stop, as it has done previously when other unauthorized brokers were discovered.”
Sim Desai, founder and CEO of Hiive, provides an alternative view to why secondary market trading is bad for emerging artists. He claims that supporting active trading would help encourage more interest in primary shares for subsequent funding rounds. Among other things, Desai underscored an important aspect. When sellers can’t find buyers, it’s almost always a sign that something is wrong with price and valuation—not a lack of capital to deploy.
Desai remarked, “If someone is having a hard time selling something, it’s merely a function of price and valuation rather than availability of capital.”
Figure AI’s approach to managing its secondary market trading highlights a broader trend among companies that often block direct sales. There is a widespread assumption that secondary sales can produce a “zero-sum game” effect, depressing secondary market investor sentiment and demand, and disrupting overall secondary market dynamics.