New Class Action: Figs, Inc. (FIGS) Damage Analysis

lass Period: May 27,2021 – May 12, 2022 inclusive

IPO Offer Price: $22.00

IPO Offer Date: May 27, 2021

Class Definition: On behalf of all persons or entities that purchased or otherwise acquired: (i) FIGS securities between May 27, 2021 and May 12, 2022, inclusive; and/or (ii) FIGS stock pursuant and/or traceable to the Offering Documents issued in connection with FIGS’ initial public offering

The Allegations are:

Defendant made false statements and/or concealed that: (i) inflated the Company’s true ability to successfully secure repeat customers; (ii) failed to disclose the Company’s increasing dependence on air freight; (iii) inflated the expected net revenues, gross margin, and adjusted EBITDA margin for 2022; and (iv) that, as a result, of the foregoing, defendants’ statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

Drops & Damages:

On December, 10, 2021, the Company announced defendant Lawrence’s retirement.  FIGS’ stock price fell 21% on this news on unusually heavy trading.  

On May 12, 2022, FIGS issued a press release announcing its first quarter 2022 financial results as well as an update to the full year outlook for 2022. Not only did expected 2022 net revenues drop to a range of $510 million to $530 million compared to the previous outlook of $550 million to $560 million, expected gross margin decreased to a range of 67% to 68% compared to the previous outlook of 70%+ as well as a drop in its adjusted gross EBITDA margin to a range of 16% to 18% in comparison to its original estimate of 20%+.

The decrease in expected gross margin was “primarily due to a significant increase in the Company’s use of air freight to help mitigate supply chain challenges.”  Notably, FIGS’ gross margin for the first quarter of 2022 was reportedly 71.2%, representing a forty basis-point decrease year-over-year. 

The Company also attributed this drop to higher air freight spend and increased ocean and air freight rates despite previously assuring stockholders that FIGS’ dependence on air freight had “peak[ed]” in the fourth quarter of 2021.  On this news, shares of FIGS stock dropped nearly 25% from a close of $12.85 per share on May 12, 2022 to $9.64 per share on May 13, 2022.    

So you have a market cap of 1.2b and float of of 1.48b, resulting: 

Close Drop Day -1 

Close Drop Day  

Drop %

Damages  

$12.85

$9.64

-24.98%

$ 2,375,400,000

Section 11 Damages:: $392,365,217.81

Insiders own 24.59%, and institutions own 97.59%.

 

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