Baron Generational Growth Fund on FIGS, Inc.
Thesis
The Fund believes FIGS can continue gaining share in the global health-care apparel market despite significant recent stock-price weakness. The company reported strong first-quarter results, with revenue rising 28% and exceeding both guidance and consensus expectations. Growth was broad-based, with U.S. revenue increasing 24%, international revenue accelerating 50%, and active customers exceeding three million for the first time. Both new and repeat customers contributed to growth, reinforcing the Fund's confidence in the strength of FIGS' direct-to-consumer business model.
“We continue to have conviction in the strength of FIGS' business model”
Key risks
- The company may fail to sustain its recent high rate of revenue and customer growth.
- Investor positioning and valuation compression could continue to weigh on the shares.