The Bear Case: How FIGS Behaves During Market Shocks
Holding equities means accepting volatility as the price of long-term compounding. Across the 5 major systemic shocks where FIGS (FIGS) traded, the stock posted an average drawdown of -36%. For context, the S&P 500 averaged a -13% decline during those same periods.
If you are an investor in FIGS stock, you might be asking: if the macroeconomic environment fractures, how far can this stock actually fall?
One of the ways to understand this is to simply see how the stock has performed during past market crashes.
How Does It Handle Rate & Valuation Shock?
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2022 Inflation Shock & Fed Tightening (Jan 2022 to Oct 2022)
- CPI hit 9.1%, forcing aggressive tightening since Volcker. Russia’s invasion of Ukraine further spiked global energy and food prices.
- Stocks and bonds fell simultaneously, eliminating the 60/40 hedge. Rising rates crushed long-duration assets until CPI declined in October 2022.
FIGS stock experienced -75% drawdown during this event, compared to -24% for the S&P and -35% for bonds.
What Happens During Credit & Liquidity Crises?
2023 SVB Regional Banking Crisis (Feb 2023 to Jul 2023)
- SVB’s long-duration Treasury portfolio was destroyed by rising rates. A March 8, 2023 loss disclosure triggered an instantaneous bank run accelerated by social media.
- The FDIC seized SVB, Signature, and First Republic. Contagion was contained through deposit backstops and the Fed’s Bank Term Funding Program emergency liquidity.
FIGS stock saw -38% drawdown vs -6.7% for the S&P and -4.3% for bonds.
How It Fares During Sovereign & Geopolitical Risk?
2025 US Tariff Shock (Feb 2025 to Jun 2025)
- The Trump administration announced 145% tariffs on Chinese imports on April 2, 2025, representing the most aggressive trade action since the 1930s.
- Equities and the dollar fell simultaneously, signaling lost confidence. Supply chain disruptions and small-cap input inflation drove broad declines, affecting nearly all sectors.
The drawdown for FIGS stood at -33% compared to -19% for the S&P and -3.8% for bonds.
Past Market Shock Drawdowns Summarized For FIGS
| Shock Event | S&P | Bonds | Sector | Stock |
|---|---|---|---|---|
| 2022 Inflation Shock & Fed Tightening | -24% | -35% | -36% | -75% |
| 2023 SVB Regional Banking Crisis | -6.7% | -4.3% | -8.1% | -38% |
| Summer-Fall 2023 Five Percent Yield Shock | -9.5% | -17% | -14% | -26% |
| 2024 Yen Carry Trade Unwind | -7.8% | -1.2% | -11% | -7.1% |
| 2025 US Tariff Shock | -19% | -3.8% | -22% | -33% |
[1] 2022 Inflation Shock & Fed Tightening: 9.1% CPI forced aggressive rate hikes, crushing both stocks and bonds simultaneously.
[2] 2023 SVB Regional Banking Crisis: SVB’s rate-driven bond losses triggered a social-media bank run, seized by FDIC.
[3] Summer-Fall 2023 Five Percent Yield Shock: Strong economic data pushed 10-year yields to 5%, compressing yield-sensitive sector valuations.
[4] 2024 Yen Carry Trade Unwind: BOJ rate hike unwound yen carry trades, briefly crashing tech stocks globally.
[5] 2025 US Tariff Shock: 145% China tariffs crashed equities and the dollar on supply chain disruption fears.
So What Can You Do For Your Investments?
Ultimately, surviving a market crash requires knowing what breaks your specific holdings. For FIGS, the kryptonite is clearly Rate & Valuation Shock. By sizing your positions with these specific drawdowns in mind, you can remove emotion from the equation entirely.
Adopting objective and rule-based portfolio management is the most effective way to protect capital when the macro environment inevitably fractures again. Trefis High Quality Portfolio is designed with such principles in mind, and has returned > 105% since inception.