Funko Shares 'Pop' On Earnings And A New Investment: Here Are The Details

Zinger Key Points
  • Funko beats earnings and sales estimates.
  • Funko also announced an investment from The Chernin Group.

Shares of pop culture collectibles company Funko Inc FNKO are rocketing higher after announcing first-quarter earnings and a new investment

What Happened: Funko reported first-quarter sales of $308.3 million, up 63% year-over-year and ahead of a $271.99 million consensus estimate, according to data from Benzinga Pro.

The company reported first-quarter earnings per share of 34 cents, beating estimates of 22 cents per share.

The company reported strong demand for its products: U.S. sales were up 70.1% year-over-year to $232.3 million, Europe sales were up 43.5% year-over-year to $57.1 million, and international sales were up 48.3% year-over-year to $19.1 million.

Funko's core collectible brands report sales growth of 52.8% year-over-year, led by its Pop! Brand up 42.8% year-over-year. Loungefly net sales were up 103.5% to $50.1 million.

Direct-to-consumer sales were up 36% year-over-year in the first quarter. The company also highlighted its non-fungible token segment Digital Pop!, which had increased drops in the first quarter and had a Scooby Doo NFT collection launched in the quarter.

“We continue to outperform expectations, effectively navigating ongoing headwinds in the global supply chain and demonstrating the strength of Funko’s pop culture platform,” said Funko CEO Andrew Perlmutter.

Related Link: Is Funko The Next Big NFT Winner? 

New Investment: Along with its earnings, Funko announced an investment from The Chernin Group.

The Chernin Group and a group of investors are investing $263 million in the company by buying a stake from ACON Investments. After the transaction, The Chernin Group will own 25% of Funko.

Investors included along with Chernin Group include eBay Inc EBAY, Rich Paul and former Walt Disney Co DIS CEO Bob Iger.

Iger and Peter Chernin will serve as advisors to the Funko Board of Directors. The Chernin Group will designate two directors to the Funko Board of Directors.

Funko and eBay entered into a commercial agreement to be the preferred secondary marketplace for Funko as part of the transaction. The two companies will also partner on exclusive product releases.

Paul, a leading sports and music agent, will help Funko with expansion opportunities in the music and sports spaces.

“We believe Funko is significantly undervalued in the public markets and at this highly attractive entry price provides a runway of opportunity and growth potential,” Chernin said. “There are many areas of identifiable growth across content, commerce, marketplaces, consumer products and technology that should drive substantial increases to Funko’s performance.”

What’s Next: Perlmutter said the company is focused on its strategic growth pillars, which include revenue diversification, innovation of collectibles, growing the DTC business and growth of international sales.

Funko raised its full-year guidance to a new range of $1.275 billion to $1.325 billion, representing growth of 24% to 29% year-over-year. The company sees adjusted earnings per share hitting a range of $1.80 to $1.90.

Funko was previously highlighted on Benzinga as a strong investment idea based on its huge pop culture partnerships, new products and launch of an NFT marketplace.

FNKO Price Action: Funko spiked more than 43% right before the close and were halted. Shares resumed trading at 4:50 p.m. ET and were up about 30% to $21.75 at press time.

Disclosure: The author is long FNKO shares.

Posted In: Bob IgerCollectiblesFunko PopNFTNFTsnon-fungible tokensScooby DooThe Chernin GroupEarningsNewsSmall CapAfter-Hours CenterMoversTrading Ideas