What Happened?

Shares of healthcare apparel company Figs (NYSE:FIGS) fell 29.5% in the afternoon session after 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.

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What The Market Is Telling Us

Figs’s shares are extremely volatile and have had 39 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.

Figs is down 29.8% since the beginning of the year, and at $4.72 per share, it is trading 40.6% below its 52-week high of $7.94 from December 2023. Investors who bought $1,000 worth of Figs’s shares at the IPO in May 2021 would now be looking at an investment worth $156.40.

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