What Happened?
Shares of healthcare apparel company Figs (NYSE: FIGS) jumped 13.2% in the afternoon session after the company reported strong third-quarter financial results that significantly beat Wall Street's expectations.
The healthcare apparel company's revenue grew 8.2% year-over-year to $151.7 million, exceeding analyst forecasts. This growth was complemented by a significant earnings beat, with adjusted earnings per share of $0.05, more than double the consensus estimate of $0.02. A key driver for the strong results was improved profitability; Figs' operating margin swung from a loss of 6.2% in the same quarter last year to a profit of 6.4%. Investors reacted positively to the strong top- and bottom-line performance and signs of increased operational efficiency.
The shares closed the day at $8.56, up 13.7% from previous close.
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What Is The Market Telling Us
Figs’s shares are very volatile and have had 29 moves greater than 5% over the last year. But moves this big are rare even for Figs and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 3.5% on the news that markets became increasingly wary of high valuations following a significant AI-driven rally.
The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.
Figs is up 45.2% since the beginning of the year, and at $8.55 per share, has set a new 52-week high. Investors who bought $1,000 worth of Figs’s shares at the IPO in May 2021 would now be looking at an investment worth $284.81.
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