Pop culture toymaker Funko Pop (NASDAQ: FNKO) stock saw a resurgence defying the macro bear market to provide exit opportunities for investors. The toy and entertainment segment has been notably resilient in the market sell-off. The Company hit record first-quarter sales and raised its fiscal full-year 2022 guidance. Additionally, the Company announced a new 25% stake owner in the form of a consortium including the Chernin Group, eBay (NASDAQ: EBAY), the former Disney CEO Bob Iger, and the Klutch Sports Group CEO Rich Paul. The Chernin Group will also occupy two board seats from the deal. The bear market in stocks and impending economic recession are negatively impacting collectibles like Funko Pops as well as its stock price. The elevated price of the shares is providing prudent investors with opportunistic exit levels to ring the register and cash out FNKO shares while the liquidity remains.
Q1 Fiscal 2022 Earnings Release
On May 5, 2022, Funko released its fiscal first-quarter fiscal 2022 results for the quarter ending March 2022. The Company reported earnings of $0.34 per share versus consensus analyst estimates of $0.22 per share, beating estimates by $0.12 per share. Revenues rose 63% year-over-year (YoY) to $308.34 million versus consensus analyst estimates of $271.99 million. Adjusted EBITDA rose 21.8% to $36.3 million. Sustained demand from Funko fans drove U.S. net sales to rise 70.1% to $232.2 million. Funko CEO Andrew Perlmutter commented, “We are very pleased with our first-quarter results, which build on the strength and momentum we achieved in 2021. We continue to outperform expectations, effectively navigating ongoing headwinds in the global supply chain and demonstrating the strength of Funko’s pop culture platform. Our results in the first quarter were broad-based, with ongoing strength across brand categories, geographies, and channels. Looking ahead, we remain intently focused on executing against our strategic growth pillars including innovating within our core collectibles category, revenue diversification, growing our DTC business, and international opportunities.”
Fiscal Full-Year 2021 Guidance
Funko provided its fiscal full-year 2022 guidance expecting EPS to come in between $1.80 to $1.90 versus $1.85 analyst estimates. The Company expects full-year 2022 revenues to come in between $1.275 billion to $1.325 billion versus $1.26 billion consensus estimates.
Activist Investors and eBay Partnership
The driving catalyst for the strong earnings gap was the news of a $263 million strategic investment in the Company in an all-secondary transaction led by The Chernin Group. The consortium also includes eBay Robert Iger, and Rich Paul and is acquiring 12,520,559 shares of Funko at $21.00 per share from ACON Investments. This will bring their ownership stake to 25% of Funko. eBay will be the preferred secondary marketplace for Funko, and they will also collaborate on exclusive product releases. This news sent shares spiking as high as $22.19. Since this is a secondary private transaction, the Company gets no proceeds or direct monetary benefit. The collectibles markets tend to correlate with the U.S. economy and financial markets.
FNKO Opportunistic Exit Levels
Using the rifle charts on the weekly and daily time frames provides a precise view of the landscape for FNKO stock. The weekly rifle chart peaked off the $27.00 Fibonacci (fib) level before descending to the $15.52 area fib. Shares spiked strongly on earnings and investment news to peak shares at $22.19. The weekly rifle chart formed a laggard breakout with a rising 5-period moving average (MA) at $18.75 followed by the weekly 15-period MA at $17.97. The weekly upper Bollinger Bands (BBs) overshot at $21.39 before shares snapped back under them on the reversion setting up a weekly make or break. The daily rifle chart uptrend is starting to turn as the 5-period MA support now becomes resistant as it slopes down at $19.34 attempting to crossover down through the 15-period MA at $18.94. The daily 200-period MA sits near the $17.88 fib and the daily 50-period sits at the $17.76 level. The daily market structure high (MSH) sell triggered a breakdown under $19.49. The daily stochastic lower BBs sits at $14.15. Prudent investors can use the elevated prices to ring the register on shares between the $19.15 fib up towards the $23.82 fib level. Stop-losses may be considered if shares fall under the weekly 200-period MA at $15.80.
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