Funko Inc

Funko, Inc. (NASDAQ: FNKO) is a pop culture consumer products company. It is engaged in selling a range of pop culture consumer products, featuring characters from a range of media and entertainment content, including movies, TV shows, video games, music, and sports.

Recent Financial and Business Updates:

• First Quarter 2023 Financial Overview (Compared to First Quarter 2022):
  • Net sales experienced an 18% decline, amounting to USD 251.9 million.
  • The net loss saw a significant surge of 521%, reaching USD 61.1 million.
  • Adjusted EBITDA loss also increased by 139%, totaling USD 14.0 million.
  • GAAP loss per diluted share was reported at USD 1.17, while the adjusted loss per diluted share stood at USD 0.49.

• First Quarter 2023 Operating Highlights:
  • Direct-to-consumer net sales exhibited remarkable growth of 61% year over year, driven by strong fan enthusiasm and improved e-commerce capabilities, showcasing the strength of the Funko brand.
  • The introduction of Bitty Pop! marked one of the most successful product launches in the company's history, tapping into the growing trend of miniature collectibles.
  • A new partnership agreement with Fanatics, a leading name in the sports pop culture category, was established, promising exciting new collectibles offerings.
  • Significant reductions in expected net loss and adjusted EBITDA loss were achieved through effective progress on multiple operating initiatives, including the elimination of excess container charges and improved fulfillment costs.

• Financial Position as of March 31, 2023:
  • Total cash and cash equivalents amounted to USD 34.8 million, reflecting a 5.0% increase compared to March 31, 2022.
  • Total debt stood at USD 310.4 million, including outstanding amounts under the Company's term loan facility, net of unamortized discounts, revolving line of credit, and the Company's equipment finance loan.
  • Inventories as of the end of the first quarter of 2023 totaled USD 191.6 million, showing an 18.6% increase compared to the previous year but a 22.3% decrease from the fourth quarter of 2022.
    

Technical Observation (on the daily chart)

The price of FNKO stock has shown a consistent downward trend since making 52-week high on August 01, 2022, correcting around 73.15%. Currently, the stock is near an important support zone of USD 6.50-USD 7.50, from where price has taken support in the past. The RSI (14 period) momentum indicator is at an oversold value of 24.20, with expectations of some consolidation or an upside momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Funko, Inc. (NASDAQ: FNKO) at the closing price of USD 7.51 as of July 28, 2023.  

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 28, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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