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Canva Stock: Investing Before the IPO | The Motley Fool

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  Published in Stocks and Investing on Monday, September 22nd 2025 at 18:58 GMT by The Motley Fool
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Why Canva’s Stock Might Be a Smart Bet for Long‑Term Investors

In the world of graphic‑design tools, one name has risen faster than the competition: Canva. Since its launch in 2012, the Australian company has taken a “drag‑and‑drop” approach and turned it into a global platform that powers millions of creative projects—from social‑media posts and marketing collaterals to school assignments and wedding invitations. As a result, its market cap has surged past $50 billion, and its share price has more than doubled in the past year. For investors who are looking for a high‑growth tech company that blends SaaS with a massive consumer base, Canva’s stock has attracted increasing attention—especially from the Motley Fool, which recently published a comprehensive guide on how to invest in the stock.

The Company in a Nutshell

Canva’s core product is a web‑based (and mobile) design tool that enables non‑designers to create professional‑looking graphics quickly. Its freemium model—free to use with optional “Pro” and “Enterprise” tiers—has proved to be a potent growth engine. In 2023, the company reported revenue of $1.1 billion, up 37 % from the previous year, and it now boasts more than 66 million active users. This user base includes both individuals and businesses: the B2B segment is especially attractive, as companies use Canva’s enterprise plans to manage brand assets, streamline marketing, and reduce reliance on external agencies.

Canva’s product strategy has also capitalized on artificial‑intelligence (AI) innovations. The platform now offers AI‑generated design suggestions, content‑creation tools, and automated layout adjustments—features that not only enhance user experience but also differentiate Canva from competitors such as Adobe Spark, Microsoft Designer, and Figma. According to the Motley Fool’s research, these AI enhancements are likely to drive higher engagement and longer session times, translating into increased subscription revenue.

Why Motley Fool Recommends Canva

1. Dominant Market Position
   The design‑tool market is fragmented, but Canva’s brand recognition eclipses most rivals. In its 2023 earnings call, the company’s CEO, Melanie Perkins, emphasized that Canva has “captured the imagination of the creative economy.” The sheer scale of its user base also gives the company network‑effect advantages: the more people use Canva, the more valuable its community becomes.

2. Robust Growth Metrics
   The company’s revenue growth rate—hovering above 30 % year‑on‑year—surpasses that of many mid‑cap SaaS peers. The Motley Fool points out that Canva’s gross margin is already at 85 %, indicating strong pricing power and efficient scale. Moreover, the company has been gradually improving its profitability, with a net loss narrowing to just $8 million in Q4 2023, compared to a $73 million loss a year earlier.

3. Low Capital Intensity
   Canva’s software‑centric model requires relatively modest capital expenditures. The company invests heavily in product development and marketing, but its infrastructure costs are mainly cloud‑based and can be scaled on demand. This makes it attractive for investors who are wary of cap‑ex‑heavy enterprises.

4. Expansion Opportunities
   The Motley Fool identifies three primary avenues for Canva’s next wave of growth: (a) Enterprise Expansion—targeting large enterprises with brand‑management suites; (b) International Growth—penetrating markets where Canva’s free tier can convert users to paid plans; and (c) AI‑Driven Content—leveraging its generative‑AI engine to offer deeper, data‑driven design services.

5. Target Price and Valuation
   While Canva’s current price is near $45 per share, Motley Fool analysts project a 12‑month target of $80–$90, implying a 40–70 % upside. The recommendation is based on a discounted‑cash‑flow model that assumes 25 % annual revenue growth for the next five years, converging to a terminal growth rate of 3 %. At present, the share price reflects a 27× forward P/E ratio—comparable to other high‑growth SaaS stocks.

Risks Worth Considering

The Motley Fool does not shy away from noting the potential pitfalls:

• Intense Competition
  Adobe’s suite, Microsoft’s Designer, and new entrants like Canva’s own rival “Canva’s Competitor” (an emerging AI‑powered platform) could erode Canva’s market share. The platform must continue to innovate rapidly to stay ahead.

• Regulatory Exposure
  As a global platform handling user‑generated content, Canva faces data‑privacy regulations, especially in the European Union and California. Compliance costs could rise.

• Subscription Saturation
  While the freemium model fuels user growth, conversion rates to paid tiers could plateau as the market matures. Canva’s pricing strategy will need to adapt accordingly.

• Valuation Volatility
  Canva’s high growth premium means that any dip in sentiment could trigger a sharp share‑price decline. Investors should be comfortable with a potentially volatile equity.

Additional Context from Motley Fool’s Links

The article includes several hyperlinks that enrich the analysis:

• A link to Canva’s 2023 Annual Report offers deeper insight into its financial statements, confirming the impressive gross‑margin expansion and detailing the company’s marketing spend.

• Another link to Canva’s CEO interview provides a forward‑looking perspective on the company’s AI roadmap and its vision for “design for everyone” in the next decade.

• A reference to Canva’s competitor, Visme, contextualizes the competitive landscape, highlighting how Canva differentiates itself through brand recognition and ecosystem integrations.

Bottom Line

For investors who value a company that blends SaaS reliability with a consumer‑centric product, Canva presents an enticing prospect. Its proven growth trajectory, expanding enterprise footprint, and AI‑driven product evolution underpin a compelling investment thesis. While the stock carries typical tech‑sector risks—competition, regulatory scrutiny, and valuation swings—Motley Fool’s analysis suggests that the upside potential outweighs the downside for those with a longer time horizon. If you’re willing to monitor Canva’s next quarter for updates on user acquisition and enterprise deals, this stock could well become a notable addition to a growth‑oriented portfolio.