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Figs' $1B Takeover Bid: A Lifeline or a Last Resort?

Eli GrantWednesday, Dec 11, 2024 12:00 pm ET
3min read


Figs, Inc. (FIGS), a direct-to-consumer healthcare apparel and lifestyle brand, has received a takeover offer from Story3 Capital Partners, valuing the company at over $1 billion, according to a Wall Street Journal report. The private equity firm offered $6 per share for all outstanding common shares it doesn't already own. This offer comes as Figs' shares jumped over 9% in premarket trading on Wednesday.

Figs, which went public in 2021 with an initial valuation of $4.57 billion, has faced challenges in maintaining its growth momentum as the COVID-19 pandemic has waned and demand for its products has returned to normal levels. The company's stock price has declined by over 20% this year, primarily due to increased operational costs and stagnant growth.

Story3's proposed takeover could provide Figs with the financial and strategic support needed to navigate a tough macroeconomic climate. As a private company, Figs would be empowered to accelerate its strategy, focus on innovation, and swiftly execute initiatives that build on its category leadership. Story3's experienced partners and long-term investment, along with debt financing from Fortress Investment Group, would enable Figs to overcome operational hurdles and achieve sustainable growth.



However, it's essential to consider whether Story3's proposed valuation aligns with Figs' long-term growth prospects. Figs' forward EPS is projected to be $0.08, resulting in a forward P/E ratio of 74.32. This suggests that the market expects Figs' earnings to grow in the coming years. Story3's proposed valuation of over $1 billion, or $6 per share, implies a market capitalization of approximately $1017 million. This valuation is slightly higher than Figs' current market capitalization of around $900 million, indicating that Story3 sees potential in the company's future growth prospects.

FIGS Trend


Nevertheless, Story3's proposed valuation is still lower than Figs' initial valuation of $4.57 billion when it went public in 2021. This discrepancy may reflect the challenges Figs has faced in maintaining its growth momentum as the COVID-19 pandemic has waned and demand for its products has returned to normal levels. Story3's offer suggests a confidence in Figs' long-term growth potential, despite recent earnings fluctuations.

In conclusion, Story3 Capital Partners' proposed takeover of Figs at $6 per share values the company at over $1 billion, a 12% premium to its current market capitalization. This offer aligns with Figs' projected earnings growth but remains lower than the company's initial valuation. While Story3 sees potential in Figs' future prospects, they are also aware of the challenges the company faces in a tough macroeconomic climate. As Figs considers this takeover offer, it must weigh the potential benefits of private ownership against the risks and uncertainties of remaining a public company.
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_hiddenscout
12/11
Private equity takeover could boost $FIGS innovation.
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NavyGuyvet
12/11
Holding $FIGS long-term, but watching this closely.
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Repturtle
12/11
Figs going private could be a game-changer. Less drama, more focus on innovation. Let's see if they can turn it around.
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Gix-99
12/11
$FIGS needs a reboot, Story3 might be the fix.
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LividAd4250
12/11
$FIGS needs a reboot. Private equity might be the shot in the arm it needs.
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stoked_7
12/11
PE firms know how to squeeze efficiency, maybe good for $FIGS.
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Hoshigetsu
12/11
Figs to private? Smart move for restructuring.
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GnosticSon
12/11
Figs' growth stalled, Story3 might be the catalyst.
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Qwazarius
12/11
Figs going private could be a game-changer. Less drama, more focus on innovation. 🚀
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Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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