Shares of pop culture collectibles manufacturer Funko Inc. (NASDAQ: FNKO) plummeted 14.27% in Friday's trading session, closing at $9.40 per share. The significant drop in the stock price came after the company reported weak fourth-quarter results and provided a disappointing full-year guidance.
The primary reasons behind Funko's stock plummet were twofold. Firstly, the company's full-year revenue and EBITDA guidance missed analysts' expectations, with tariffs on Chinese imports and continued softness in U.S. sales remaining as headwinds. Despite outperforming estimates on revenue and EBITDA during the fourth quarter, driven by strength in its direct-to-consumer and EMEA businesses, the overall picture appeared weak.
Additionally, Funko's stock valuation and revenue growth prospects played a role in the market's reaction. While the company's price-to-sales ratio is in line with the industry, its revenue growth has slowed, with a decline of 8% in the last year. Looking ahead, analysts forecast a modest 3.1% revenue growth for the coming year, similar to the broader industry's growth projection of 1.9%. This outlook, coupled with the weak guidance, contributed to the sharp sell-off in Funko's shares.
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