Bear of the Day: Funko (FNKO)

If you’ve been paying attention to collector culture over the last decade, you know Funko was once the king of the hill. Its Pop! vinyl figures exploded into the mainstream, plastering the shelves of comic shops, big-box retailers, and even office desks across America. At its peak, the company’s appeal was as broad as it was deep, spanning Marvel superheroes, classic TV icons, and even obscure cult movie characters. But the same wave that lifted Funko to pop culture dominance has now begun to recede, and the company’s latest earnings show that this once high-flying stock has lost a good chunk of its magic.

That’s a big reason why I’m naming Funko (FNKO) my Bear of the Day. The company’s second-quarter 2025 report was a sobering reminder that the boom times are behind it, at least for now. Funko posted an adjusted net loss of $0.48 per share, falling short of analyst expectations of a $0.44 loss. Revenue clocked in at $193.5 million, representing a steep 21.9% year-over-year decline and missing consensus estimates that ranged as high as $203 million. This wasn’t just a soft quarter, it was a material step backward from the momentum Funko enjoyed just a few years ago. Gross margin erosion made things worse, plunging to 32.1% from 42% in the same period last year, while adjusted EBITDA came in at a negative $16.5 million. Operating expenses also ticked higher, with SG&A climbing to $82.3 million despite shrinking sales, an imbalance that puts even more pressure on profitability.

The pain wasn’t isolated to one segment. Core Collectibles sales fell roughly 16%, Loungefly-branded bags and accessories slid nearly 23%, and the “Other” category, which includes games and other experiments, cratered by almost 79%. That kind of across-the-board decline suggests this isn’t just about macroeconomic headwinds or consumer pullback, it’s about brand fatigue and oversaturation. Funko once thrived on the “gotta have it” factor that drove collectors to snap up every new release, but when every shelf is groaning under the weight of plastic bobbleheads, scarcity, which is the lifeblood of collectibles, disappears. Attempts to branch into board games, apparel, and even NFTs haven’t provided enough traction to offset the slowdown in vinyl figure sales.

From an investor’s perspective, the technical picture is just as uninspiring as the fundamentals. Shares have been languishing well below their 200-day moving average, stuck in a downtrend that has yet to show signs of reversing. Analysts aren’t offering much optimism either, with no upward earnings revisions in the last 90 days and multiple downward revisions instead. Management’s decision to pull its full-year guidance entirely speaks volumes about the uncertainty ahead, and without a credible near-term growth catalyst, the market is treating Funko as a name to avoid.

Funko is in the Consumer Products – Discretionary industry which ranks in the Top 39% of our Zacks Industry Rank. There are a few names within the industry which are in the good graces of our Zacks Rank. These include Zacks Rank #1 (Strong Buy) Betterware de Mexico (BWMX) and Central Garden and Pet (CENT).

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