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

Quarterly reports from Mattel Inc (NASDAQ: MAT) and Hasbro Inc (NASDAQ: HAS) were better than expected and both toy companies pointed to seeing strong holiday quarters. This could bode well for shares of Funko Inc (NASDAQ: 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.