Pop Culture Toy Maker Funko Pop (NASDAQ:FNKO) the stock has seen a resurgence defying the macro bear market provide exit opportunities for investors. the toy and entertainment segment was particularly resistant to the market sell-off. The company posted record first quarter sales and raised its guidance for fiscal year 2022. In addition, the Company announced a new 25% owner in the form of a consortium including the Chernin Group, eBay (NASDAQ:EBAY), former Disney CEO Bob Iger and Klutch Sports Group CEO Rich Paul. The Chernin Group will also occupy two seats on the board of directors of the agreement. The bear market in equities and imminent economic recession negatively impact collectibles like Funko Pops as well as its stock price. The high share price provides cautious investors with opportunistic exit levels to ring the ledger and cash in FNKO shares as long as liquidity remains.
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Yost Partners rose 0.8% in the first quarter, while Yost Focused Long Funds lost 5% net. The firm’s benchmark, the MSCI World Index, fell 5.2%. Fund returns outperformed their benchmark due to their value tilt, high exposures to energy and financials and a bias towards quality. In his first quarter letter Read more
Publication of results for the first quarter of fiscal year 2022
On May 5, 2022, Funko released its fiscal 2022 first quarter results for the quarter ending March 2022. The company reported earnings of $0.34 per share compared to analyst consensus estimates of 0. $22 per share, beating estimates of $0.12 per share. Revenue was up 63% year-over-year (YoY) to $308.34 million from analysts’ consensus estimate of $271.99 million. Adjusted EBITDA increased by 21.8% to reach $36.3 million. Sustained demand from Funko fans drove US net sales up 70.1% to $232.2 million. Funko CEO Andrew Perlmutter commented, “We are very pleased with our first quarter results, which build on the strength and momentum we have achieved in 2021. We continue to exceed expectations, monitoring effectively addressing the ongoing headwinds in the global supply chain and demonstrating the strength of Funko’s pop culture platform. Our first quarter results were broad based, with continued strength across brand categories, geographies and channels. Looking ahead, we remain focused on executing on our strategic growth pillars, including innovation in our core collectibles category, revenue diversification, growing our DTC business and international opportunities.
Forecast for fiscal year 2021
Funko provided its guidance for fiscal 2022 expecting EPS to be between $1.80 and $1.90 versus analysts’ estimates of $1.85. The company expects full-year 2022 revenue to be between $1.275 billion and $1.325 billion, compared to consensus estimates of $1.26 billion.
Activist Investors and the eBay Partnership
The main catalyst for the strong earnings gap was the announcement of a $263 million strategic investment in the company in an entirely secondary transaction led by The Chernin Group. The consortium also includes eBay Robert Iger and Rich Paul and is acquiring 12,520,559 shares of Funko at $21.00 per share from ACON Investments. This will bring their stake to 25% of Funko. eBay will be Funko’s preferred secondary marketplace, and they will also collaborate on exclusive product releases. This news sent the shares up as high as $22.19. Since this is a secondary private transaction, the Company does not obtain any proceeds or direct monetary benefit. Collectibles markets tend to correlate with the US economy and financial markets.
FNKO opportunistic exit levels
Using rifle paintings on the weekly and daily time slots provides an accurate view of the FNKO stock landscape. Rifles weekly chart peaked at $27.00 Fibonacci level (fib) before dropping into the $15.52 fib area. The shares rose sharply on earnings and investment news to peak at $22.19. The weekly Rifle chart formed a lagging breakout with a rising 5-period moving average (MA) at $18.75, followed by the weekly 15-period MA at $17.97. The weekly upper Bollinger Bands (BB) moved above $21.39 before stocks pulled back below them on the reversal, creating a weekly breakout. The Rifles chart’s daily uptrend is starting to reverse as the 5-period MA support now turns resistant as it moves lower to $19.34 attempting to cross the 15-period MA at $18.94 . The daily 200 period MA is near the $17.88 fib and the daily 50 period is at the $17.76 level. The daily high market structure (MSH) the selloff triggered a breakout below $19.49. The daily Stochastic BB lower sits at $14.15. Cautious investors can use the high prices to ring the stock ledger between the $19.15 fib and the $23.82 fib level. Stop-losses can be considered if the stock falls below the weekly 200-period MA at $15.80.
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Article by Jea Yu, market beat