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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
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  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Why Figs (FIGS) Shares Are Sliding Today

FIGS Cover Image

What Happened?

Shares of healthcare apparel company Figs (NYSE: FIGS) fell 3.4% in the pre-market session after investors reacted to a cautious outlook from Wall Street analysts, which included a "Sell" rating from Goldman Sachs. 

The negative sentiment followed recent ratings from major firms. For instance, Goldman Sachs reiterated a "Sell" rating on the stock, although it raised its price target to $4.50. Similarly, Morgan Stanley maintained a "Hold" rating while increasing its price target to $5.00. The overall consensus rating for the company remained a "Hold," with an average price target that suggested a potential downside from its recent trading price. This cautious analyst environment appeared to overshadow a rally from the previous day, which some reports suggested might have been difficult to sustain.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Figs? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Figs’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock dropped 29.5% on the news that the company reported weak third-quarter earnings. Its EBITDA missed, and its EPS fell short of Wall Street's estimates. Sales declined slightly by 1.5% year-over-year. This decrease was primarily due to lower average order values. 

On the other hand, orders from existing customers increased. Profitability took a hit as adjusted EBITDA margin dropped significantly to 3.4% from 17.2% last year, impacted by higher marketing costs and fulfillment center expenses. Given the weak results, FIGS lowered its full-year revenue growth and EBITDA margin guidance, which is always a worrisome sign. Overall, this quarter could have been better.

Figs is up 11.7% since the beginning of the year, and at $6.58 per share, it is trading close to its 52-week high of $6.84 from September 2024. Investors who bought $1,000 worth of Figs’s shares at the IPO in May 2021 would now be looking at an investment worth $219.22.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

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