Figure AI Moves to Block Secondary Stock Sales Amid Talks of $39.5 Billion Valuation

Figure AI Sends Cease-and-Desist Letters to Secondary Market Brokers Amid Valuation Surge

Humanoid robotics startup Figure AI has issued cease-and-desist letters to at least two brokers operating in the secondary market for private company stock, demanding they stop marketing the company's shares, according to a report from TechCrunch.

Curbing Unauthorized Trading

The move comes shortly after Figure AI founder Brett Adcock claimed on X (formerly Twitter) last month that his company was the "# 1 most sought-after private stock in the secondary market." However, the company is now actively working to prevent certain types of trading activity.

A spokesperson for Figure AI told TechCrunch that such letters are sent when brokers attempt to market Figure shares without authorization from the company's board of directors. "This year, when we discovered an unauthorized third-party broker was marketing Figure shares without approval... the company sent a cease and desist asking the unauthorized broker to stop, as it has done previously," the spokesperson stated, emphasizing that board authorization is required for secondary market trading.

Timing and Valuation Context

The timing of these letters is notable. Both brokers reportedly received them after a mid-February Bloomberg report indicated Figure was in talks to raise $1.5 billion at a staggering $39.5 billion valuation. This would represent a nearly fifteenfold increase from its $2.6 billion valuation achieved in February 2024, reflecting intense investor interest in the humanoid robotics sector, fueled partly by advancements in AI.

Figure counts major players like Microsoft, OpenAI, Nvidia, and Jeff Bezos among its previous investors and has secured BMW as a customer for deploying its robots in manufacturing.

Conflicting Perspectives

Secondary markets provide a mechanism for early investors and employees in private companies to gain liquidity from their shares before an Initial Public Offering (IPO). However, companies often restrict these sales.

The brokers who received the letters suggested to TechCrunch that companies sometimes try to block secondary sales if existing shareholders are attempting to sell stock at prices below the valuation targeted in a new funding round. They theorized that lower-priced secondary shares could potentially compete with or undermine the pricing of the new primary funding round.

Sim Desai, CEO of secondary marketplace Hiive (who did not comment specifically on Figure), noted that some companies view secondary trading as a "zero-sum game." He argued, however, that active secondary trading could potentially signal strong demand and attract more interest for primary shares. Difficulty in selling shares, he suggested, might be more related to pricing and valuation expectations than the availability of capital.

Open Questions

Figure AI's efforts to control secondary trading highlight the tensions that can arise between high-growth private companies, their investors seeking liquidity, and the mechanics of fundraising at rapidly increasing valuations.

Separately, TechCrunch noted that Figure has also recently disputed news reports concerning its progress with customer BMW, even threatening legal action in one instance over perceived inaccuracies.

Whether Figure AI successfully raises funds at the reported $39.5 billion valuation and under what terms existing shareholders might gain liquidity remains to be seen.