Stress Testing EYE: Historical Drawdowns and Macro Risks

Stress Testing EYE: Historical Drawdowns and Macro Risks

Every seasoned investor knows that market shocks are inevitable. What matters is the depth of the hit. Historically, across 7 major crises, National Vision (EYE) absorbs an average drawdown of -40% vs. the S&P 500's average decline of -17% over the same events.

If you are an investor in EYE 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 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.

EYE stock experienced -57% drawdown during this event, compared to -6.7% for the S&P and -4.3% for bonds.

What Happens During Growth & Demand Scare?

2020 COVID-19 Crash (Feb 2020 to Apr 2020)

• A novel coronavirus triggered pandemic fears. Italy's healthcare collapse and a March 2020 Saudi-Russia oil price war signaled uncontainable disruption.
• Governments shut economies, triggering the fastest bear market in history. Unlimited QE and $2.2T fiscal stimulus drove a V-shaped recovery following vaccine development.

EYE stock saw -61% drawdown vs -34% for the S&P and -0.7% for bonds.

How It Fares During Rate & Valuation Shock?

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.

The drawdown for EYE stood at -53% compared to -24% for the S&P and -35% for bonds.

Past Market Shock Drawdowns Summarized For EYE

[1] Q4 2018 Fed Policy Error / Growth Scare: Powell's hawkish comments and trade war fears triggered the worst December since 1931.
[2] 2020 COVID-19 Crash: Pandemic lockdowns caused history's fastest bear market before massive stimulus drove recovery.
[3] 2022 Inflation Shock & Fed Tightening: 9.1% CPI forced aggressive rate hikes, crushing both stocks and bonds simultaneously.
[4] 2023 SVB Regional Banking Crisis: SVB's rate-driven bond losses triggered a social-media bank run, seized by FDIC.
[5] Summer-Fall 2023 Five Percent Yield Shock: Strong economic data pushed 10-year yields to 5%, compressing yield-sensitive sector valuations.
[6] 2024 Yen Carry Trade Unwind: BOJ rate hike unwound yen carry trades, briefly crashing tech stocks globally.
[7] 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?

Panic is a failure of preparation. When a Credit & Liquidity Crises shock hits, EYE will contract predictably. Recognizing this behavior as a mathematical feature rather than a flaw allows investors to avoid selling at the exact wrong moment.

Incorporating a rule-based and diversified approach, such as the Trefis High Quality Portfolio (HQ), ensures your capital is protected enough to ride out these inevitable structural resets. HQ has returned > 105% since inception.