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Funko stock crashed 59.38% today November 4, 2022. As a shareholder of Funko, I find this rather unfortunate. 2022 has been a major down year for the stock market as a whole, but Funko stock had seemed to be the exception. Funko had been performing really well. A green stock in a sea of red. Sadly, that has changed.
The reason the stock fell so much is because of a pretty bad earnings report. This is not a market that is forgiving of a bad earnings report. Funko reported a profit for the quarter at $9.63 million or 19 cents a share. Compare that to last year at this time where they were at 28 cents a share. Funko did beat expectations on revenue though as they brought in $365.6 million dollars.
What worries me the most, however, is that Funko lowered their annual sales forecast for the year to $1.29-$1.33 billion. Funko has already brought in slightly less than a billion dollars this year which means they are only expecting to make $300-$340 million in revenue for quarter 4 of 2022. They believe they will bring in less money during the holiday season? I find this pretty worrisome.
Funko now has a market cap of $370.98 million which gives them a p/e ratio of just 7.20. I think that this is a major overreaction. I think Funko should be valued much higher than $370.98 million. I do understand the drop in stock price due to a terrible earnings call but almost a 60% drop seems a little much in my opinion.
I did not sell my Funko shares. I am, however, waiting to buy more. I predict they will fall more after their next earnings call considering the fact that they decreased their forecast. After that, I will consider buying more.