Funko, Inc. (FNKO) Accused of Misleading Shareholders
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between October 31, 2019 and March 5, 2020, on October 31, 2019, Funko, Inc. (FNKO) touted an increase in net sales in its third quarter 2019 financial results and reiterated its fiscal 2019 financial outlook, stating “the Company expects net sales to be in the range of $840 million to $850 million” for full year 2019. Despite Funko’s auspicious expectations, on February 5, 2020, Funko revealed in its preliminary fourth quarter 2019 financial results that its net sales were expected to decrease by 8% and that the Company would incur a $16.8 million writedown to “dispose of slower moving inventory.” On this news Funko’s stock price fell $6.20 per share, or 40%, to close at $9.29 per share. One month later, Funko affirmed a decrease of 4% year-over-year in net sales for its fourth quarter 2019 financial results citing “softness at retail during the holiday season which led to a decrease in orders.” On this news, Funko’s stock price fell over 4% to close at $6.92 per share.