Pop culture toymaker Funko Pop NASDAQ: FNKO
stock has made a dramatic recovery in early 2021 but has sold off just as dramatically into year-end as the collectors market cools off. The versatile, vertically integrated maker of its unique pop dolls has seen its stock rise with the popularity of comics and movie speculation
as the market peaked in the summer of 2021 during the peak of FOMO. Shares have continued its downward trajectory despite raised full-year 2021 guidance on both top and bottom line. The Company was a pandemic
winner and can be a post-pandemic
winner after bottoming out during the holiday buying
season. The Company is considering raising prices to offset supply chain
pressures which could help drive margin growth. The growth of live-action movies
and Disney+ releases for Marvel Cinematic Universe NYSE: DIS
will continue to spur interest in its superhero licenses. Prudent investors looking for exposure in the pop collectors market can look for opportunistic pullbacks in shares of Funko.
Q3 FY 2021 Earnings Release
On Nov. 4, 2021, Funko released its third-quarter fiscal 2021 results for the quarter ending September 2021. The Company reported earnings of $0.39 per share versus consensus analyst estimates of $0.27 per share, beating estimates by $0.12 per share. Revenues rose 40% year-over-year (YoY) to $267.7 million versus consensus analyst estimates of $240.74 million. All-time high demand levels drove broad strength across all geographies including U.S. up 35.7%, Europe up 65.7% and international up $19.1% YoY. Funko CEO Brian Mariotti commented, "As we look to the balance of this fiscal year, we are confident in our ability to execute effectively against our core operating strategies to drive continued growth while continuing to adapt quickly to any ongoing supply chain challenges. As a credit to our brand, we are continuing to expand our product categories and fan base, increasing fan engagement and bringing innovative new products to market."
Raised Full-Year 2021 Guidance
Funko raised its full-year 2021 guidance expecting EPS to come in between $1.20 to $1.31 versus $1.20 analyst estimates. The Company expects full-year 2021 revenues to come in between $950 million to $975 million versus $922.07 consensus estimates.
Conference Call Takeaways
CEO Mariotti set the tone, “As I looked to transition into my new role as Chief Creative Officer in January, I've been highly focused on continuing to elevate our level of fan interaction and bringing innovative new products to my market that have been such a hallmark of our success, these efforts is our focus on developing events that are monetizable and consistent with Funko trademark, one of a kind fan engagement. Throughout the pandemic, we've proven our ability to develop these events at any point on the calendar and in any form factor, including virtual and hybrid format.
This capability was an important factor in our ability to deliver such a strong third quarter amid unprecedented supply chain headwinds. I'll share a few events that highlight that dynamic. I'll start with our celebration of Batman Day, while perhaps not a traditional holiday on every calendar, our ability to generate genuine excitement through fan engagement drove this to be our single largest non-conventional sales day on record at funko.com. In fact, between our Alice In Wonderland event in July, FunKon in August, and our Batman takeover at September, we created three brand new events this quarter representing the top three largest sales days for our direct to consumer and e-commerce channel.” He continued, “We've also demonstrated our ability to generate enthusiasm across a range of licensed peers. As we said, when we first announced our entry into the NFT market we are in for the long term. That said today, I can confidently say we are well on our way. The rest of the calendar is built out for the year and the licensing landscape reduce the gain traction. We've also recently announced in partnership with TokenWave, the opening of our new digital marketplace Droppp.io, Droppp.io greatly more accessible, both user friendly interface as we build our visual products business. I'll reiterate that this is still a very early stage market, but we're incredibly encouraged by what we've seen so far. Let me conclude by reminding everyone that when you hear from us again next year for our Q4 call, you'll be hearing from Andrew as CEO, as he takes a over in January, we are thrilled to have Andrew taking the range. He's done an excellent job, guiding our strategy and his time with Funko. And I have absolute confidence and ability to continue that in this new role. In conjunction with Andrew, assuming the role of CEO, I will be moving to the role of Chief Creative Officer. I will be primarily focused on product creation and innovation, expand engagement and our digital pop business while continuing to investigate other potential organic and acquisitive needs to accelerate our growth and expand our adjustable markets.”
FNKO Price Trajectories
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for FNKO stock. The weekly rifle chart peaked off the $26.93 Fibonacci (fib) level. Shares collapsed back into the mid-teens as the weekly stochastic attempts to form a mini inverse pup back down towards the 20-band. The weekly 5-period moving average (MA) resistance is falling at $17.43 with weekly lower Bollinger Bands (BBs) at $15.69. The daily rifle chart has been downtrending with a falling 5-period MA at $16.13 with lower daily BBs at $15.11. The daily stochastic is attempting to trigger a low band mini inverse pup through 10-band. The daily formed a market structure high (MSH) on the $21.34 breakdown. The daily market structure low (MSL) buy triggers above $16.44. Prudent investors can watch for opportunistic pullbacks at the $15.37 level, $14.38 fib, $13.77 fib, $12.82 fib, $11.48 fib, and $10.60 fib. Upside trajectories range from the $19.48 fib up towards the $24.54 fib level.
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