Can Funko go bankrupt?

On February 5, 2020, Funko publishes its results for the last quarter of 2018 showing a drop of nearly 8% compared to the same period the previous year... Despite announcements that are meant to be optimistic for the coming year, the sanction is immediate and the stock market price is falling! In just a few hours, the Funko (FNKO) share price is almost halved.

An accident for the last quarter of 2019?

In accordance with its legal obligations, Funko regularly publishes its results showing very good performances quarter after quarter. The company's growth oscillates between +20% and +40% depending on the quarter!

The recent publication of figures for the last quarter of 2019 was therefore a shock when Funko reported a decline of 8%, driven by its main market (-9% in the United States) but also internationally (-8%). These figures are still only forecasts, and Funko's final results for the year 2019 will only be known in a month's time. Nevertheless, this is the first time the company has sent such negative signals...

Here is a summary table of Funko's results over the last two years. This is the turnover (total sales) per quarter, and it is read in "millions of dollars (USD)". For example, on the first line: Funko realized sales of USD 137M in the first quarter of 2018 against USD 167M for the same period in 2019, a growth of +22%:

A stock market price almost halved

On February 6, 2020, Funko's share price fell to an all-time low, dropping 36% in just a few hours. On 5/02, the share was trading at USD 15.49 at the close of the stock exchange while on 6/02, at the opening, the share was "only" worth USD 9.30.

The hours and days that followed confirmed the concerns about Funko in light of the latest communications and the share price dropped to a low of USD 8.61 on 7/02 at the close of trading. Next week will also be interesting to follow to evaluate if Funko manages to regain investor confidence or if we will have to wait for the publication of the final results, which for the year 2019 should show that Funko has been largely profitable!

Experts and financial analysts seem to be pointing the finger at the company's management, and it is therefore on this side that there may be further announcements to follow as well.

Announcements for 2020

Funko's CEO, Brian Mariotti, was reassuring when he announced that he expects to return to similar growth in the last few quarters as early as 2020 by focusing on the company's fundamentals, its innovations in terms of new products and its ability to develop in markets where Funko still has little presence. Mr. Mariotti nevertheless expressed his disappointment for the results of the last quarter of 2019 by immediately reminding that Funko has experienced a quarterly growth of at least 20% since 2017.

The situation is therefore worrying but the future is reassuring. The hardest part is probably that it comes at the end of the year, a period rich in commercial operations (Black Friday, Christmas, etc.) that should have been synonymous with good growth since the products marketed by Funko are conducive to good sales being perfect gifts for the holidays?

It must also be said that last year, for the last quarter, Funko had broken a record with more than 230 million USD in sales! It would therefore seem that the record was difficult to reach and has peaked at 210 million USD in sales for the last quarter of 2019.

Nevertheless, and taking a little higher, the figures announced by Funko are still good with an overall annual growth of +16% in 2019 versus 2018! Very positive results therefore and which only await Funko to renew with growth.

Especially since Funko has invested a lot over the last few months: the production of animated films, the creation of Funkoverse board games, its presence at numerous events,... As fans, we can only hope that this is a "bump in the road" and that the brand will quickly find its best colours again!