It's Funko Season...Time to Buy!!!
On Jan 21st, 2018, Region 99 recommended that you buy the Funko stock and do it slowly for the next 6 months. Well, we decided to give the stock six months and an extra month to really see whether or not we were right.
We were right!!!
Since last we wrote about Funko, which was on January 22nd, 2018, the stock was at $7.09. As of July 18, 2018 it is valued at $16.32. Within the last few months the stock has more than doubled and the company is heading into a great future. What has happened? What has taken place for this company to go into a beautiful, positive direction? Well, here is what has taken place with the company since last we spoke:
Funko Exclusives:
Funko has launched exclusives that catered to particular retail stores: Heroworld, a new line of Funko products that cater towards the younger audience. Funko is capitalizing on the younger crowds by selling curated sets of five or two figures, at a price point between $6.99 & $14.99 respectively at Target stores. Funko knows the toy collectible market as they focus on famed heroes in pop culture with non-poseable mini-statue like figures.
Aside from the new exclusive launches, Funko continues their exclusives' collection with current retail stores FYE, Hot Topic, and Gamestop and other online retailers.
Awards and Specials
Funko keeps winning everybody!!! This year Funko won the NPD Toy of the Year for their licensed Five Nights at Freddy’s line. For those not familiar with NPD, they are, a leading global information company that focuses on trends and data in multiple outlets such as toys, accessories and electronics. Funko won the top selling toy of the year award in the subclass category for Action Figure Collectibles and Accessories for their ‘Five Nights at Freddy’s’ line. Additionally, they were also nominated for their plush toy category and received accolades by receiving the People’s Choice of the Year awards by the Toy Industry Association 2018 for the second time in a row.
As for specials that the company has done; they have released a documentary about themselves titled ‘Making Fun: The Story of Funko’ which to critical acclaim, received positive reviews and received the Best Documentary Feature Film award at the 2018 San Diego Film Awards.
All in all….Funko has been real busy!!!
Now with all the success Funko is achieving we also have to look at the not so good.
The Debt
The Funko Team
Last we talked about Funko, they owed some money, a few million actually. Well guess what, In the fourth quarter of 2017, Funko repaid $123 million of debt with proceeds from their initial public offering (IPO) and available cash on hand. The debt that was repaid included the full principal and interest balances on the Company’s various promissory notes, loans and revolving credit. In connection with the repayment of their bills, the Company incurred a $5.1 million loss by writing off particular bills in the fourth quarter 2017. They believed in their company so much they gave up money to stay active!!!
What this means is this: They are paying their bills and working towards a greater financial future for the company so they can provide us with the best products at the lowest cost possible. Go Funko!!!
Toys R’Us
We recently wrote about Geoffrey’s (Toys R’ Us) demise this year. Funko had exclusives from them and because of Geoffrey’s bad financial practices, the deal between Geoffrey and Funko has ended. What this means is that any Toys R’ Us Exclusives by Funko could be extremely valuable, especially for the secondary flippers market. We advise any collectors to hold onto any Toys R’ Us Funko products and wait awhile. What does this mean for Funko, new retailers could make an attempt to take Geoffrey’s place and create exclusives for their perspective brands. Can you image the Amazon brand having its own exclusive Funko Pop?
The Lawyers & Law Suits
We’ve been stating this on numerous occasions. Lawyers and Law Firms are still trying to band former and current investors (who may have lost their money when the Funko stock first declined after their first day IPO) into a class action lawsuit. At first this was a warning sign to let investors know that this stock is dangerous, but Funko prevailed, stuck to their guns and delivered product after product and after seven months, the stock doubled. For those that may have lost their money in that initial dive, their money is pretty much rebounding making investors wealthy again.
The Future
Now I know some of you are very skeptical about the stock and are probably wondering whether or not the dive will happen again. Well, it’s the stock market people. Sometimes stocks take a dive; sometimes they continue to grow. As for the future of Funko, It’s not going anywhere. Realizing their prior mistakes, they have implemented strategies to ensure that we keep buying from retailers:
The Overstock and the Exclusives
When you walk into retail stores, the Funko merchandise in aisles are looking smaller and smaller with less and less stock. With the overstock crisis that took place with Funko products earlier this year, retailers are ensuring that their stores aren’t consisting of 65% Funko Products and 75% clearance Funko merch. What this means to the consumer is that Funko products will be somewhat harder to find and for exclusives, the search for them will be even greater. This will drive market value for the company upward as demand surpasses supply, which in turn will drive the stock possibly upwards.
Exclusive ‘Funko’ Retail Stores
Will the East Coast receive a ‘Funko Retail Store?’ It’s a possibility. Currently there is one Funko retail store in Seattle, Washington (and Europe) that houses multiple and exclusive Funko products. Funko could really increase their value if they follow the ‘IKEA’ method of opening their stores. Let me explain, IKEA isn’t a publicly traded company, but their stores are so popular and limited that people are willing to catch a cab and cross state lines to get IKEA products. Funko retailers can adopt this model by opening limited stores in particular areas. Our recommendation is to open 1 -2 stores per state in high collectible areas, such as Manhattan, NYC or Paramus, NJ. They could even open one or two in the southern and central states.
Pokemon x Funko?...Bout Time!!!
We’ve all been asking this question: Funko x Pokemon collaboration? Well, we’re seeing history in the making. Just recently Pokemon, Target and Funko have banded together to create an exclusive Pokemon, the ever loving Pikachu, exclusive to Target stores. Although, Funko hasn’t established any licenses for the Pokemon, about 1 billion people are psyched to see additional Pokemon creatures enter their home through Funko. You know how many people are going to ‘Try to catch them all?!’ As for me, I’m looking forward to the exclusive 6’’ Charizard!!! Hopefully.
..and Lastly… Fortnite!!!
OHHHHH!!! This one is a doozy!!! The game that took all children and adults by storm: Fortnite. Funko announced that they are teaming up with Epic Games, the founder of such games as Fortnite, Unreal, Gears of War, Shadow Complex, and the Infinity Blade series, to create toys and collectibles for consumers. While some may see this as a great and innovative move, lets hope it doesn’t turn out like some of the product series that were released and never hit.
Overall, Funko’s stock is making a vertical move skyward. Their innovativeness into product placement and distribution has made them the go to company for all things in the pop culture market. As we look into the remaining 5 months of 2018, our recommendation for the stock is as followed:
Definitely….. Invest in the Company…they’re not going anywhere!!!
