Why Funko Shares Could POP To Double Digits With Strong Holiday Season

Quarterly reports from Mattel Inc MAT and Hasbro Inc HAS were better than expected and both toy companies pointed to seeing strong holiday quarters. This could bode well for shares of Funko Inc FNKO, which are down 60% in 2020.

Funko is best known for its Pop! line of collectible figures.

What To Know: Funko reported second-quarter earnings in August, which saw net sales fall 49% year over year to $98.1 million while direct-to-consumer e-commerce sales were up 350%.

The drop came mainly due to pandemic pressure with many of the 25,000 retail locations that sell Funko items closed.

Sales could rebound when the company reports third-quarter earnings. Funko could also provide an update on how it sees the 2020 holiday season playing out as physical retailers struggle to get foot traffic.

Related Link: Should Investors Continue Playing With Mattel’s Stock?

What’s Next: Funko has several catalysts coming that could play out in the next quarterly results or show up in full-year results.

• Funko relaunched its Funko.com website in June, which could help boost direct to consumer sales for the second half of 2020.
• Products from Funko were part of several Amazon.com sales events.
• The launch of “The Mandalorian” season 2 on Disney+ could serve as a catalyst with more Baby Yoda figures coming from Funko. The first Baby Yoda Funko Pop was the top pre-ordered figure of all time.
• Funko is diversifying its revenue from its main figure line and also working on growing international sales. International sales grew 23% in fiscal 2019.

Funko is set to report its third-quarter earnings on Nov. 5.

Benzinga’s Take: Funko has exciting launches coming in the second half of 2020, which could show up in the third-quarter earnings.

Funko has grown its own direct to consumer business, which could help with margins and growth.

Shares of Funko trade around $6.78 at publication time.