Funko (FNKO) Stock Trades Down, Here Is Why

What Happened?

Shares of pop culture collectibles manufacturer Funko (NASDAQ:FNKO) fell 3.2% in the morning session after continued negative momentum as the company reported weak second-quarter 2025 results that missed Wall Street's profitability expectations. While its revenue of $193.5 million surprisingly beat estimates, it still represented a 21.9% decline year-over-year, and the primary concern for investors was the bottom line. The company's adjusted loss per share of $0.48 was wider than analysts had anticipated. Profitability deteriorated significantly, with its operating margin plummeting to negative 18%, a steep drop from 4.3% in the same quarter last year. Furthermore, the company's financial health raised alarms, as it burned through cash and reported a precarious balance sheet with $256.6 million in debt against only $49.15 million in cash. This significant debt load, coupled with ongoing losses, created concerns about its ability to fund future operations.

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What Is The Market Telling Us

Funko’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 4 days ago when the stock dropped 31.4% on the news that the company reported second-quarter 2025 results that saw key profitability metrics fall short of Wall Street's expectations. While the company's revenue of $193.5 million came in ahead of analysts' forecasts, it still represented a steep 21.9% decline compared to the same quarter last year. The main cause for investor concern was on the bottom line, where Funko's adjusted loss per share of $0.48 missed consensus estimates. The company also reported a significant adjusted EBITDA loss of $16.53 million and burned through $22.18 million in free cash flow. This performance was driven by a sharp deterioration in profitability, with the operating margin plunging to negative 18% from a positive 4.3% a year ago, highlighting the company's ongoing operational challenges.

Funko is down 79.3% since the beginning of the year, and at $2.82 per share, it is trading 80.6% below its 52-week high of $14.50 from January 2025. Investors who bought $1,000 worth of Funko’s shares 5 years ago would now be looking at an investment worth $458.10.

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