Robbins LLP informs investors that a shareholder filed a class action on behalf of all persons and entities that purchased or otherwise acquired Funko, Inc. (NASDAQ: FNKO) common stock between May 6, 2022 and March 1, 2023. Funko is a pop culture consumer products company that creates vinyl figures, action toys, plush, accessories, apparel, and homewares relating to movies, TV shows, video games, musicians, and sports teams.
What is this Case About: Funko, Inc. (FNKO) Misled Investors Regarding Implementation of its New Software and New Distribution Center
According to the complaint, during the class period, defendants promoted the planned moved of Funko's distribution center from Everett, Washington to Buckeye, Arizona as well as the planned upgrade on the Company's enterprise resource planning (ERP) software system. Defendants repeatedly spoke of the necessity for these upgrades to serve current and future business needs.
However, these statements were materially false and misleading. Defendants failed to disclose that: (i) Funko was experiencing significantly larger delays in implementing its ERP software than it was disclosing to investors; (ii) having moved into a new warehouse without functioning ERP software in place would lead to dramatically higher costs and poorer inventory management practices; and (iii) Funko’s inability to efficiently operate the new distribution center would have a substantial, undisclosed impact on Funko’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margin.
On November 3, 2022, Funko announced its 3Q 2022 results in which Funko's earnings per share were 42% below Street estimates. The same day, Funko dramatically lowered its FY 2022 guidance and cut its projected FY 2022 Adjusted EBITDA margin. In response, Funko's stock price fell $11.58 per share, or almost 60%.
Then, on March 1, 2023, Funko announced its FY 2022 results and guidance for FY 2023. The Company saw Net Income for FY 2022 decrease to a $5.2 million loss, its Adjusted EBITDA margin decreased to 7.4% and its Adjusted Earnings per Diluted Share came in well below prior estimates at $0.57 per share. On this news, Funko's stock price fell another almost 30% per share.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Funko, Inc. Shareholders who want to act as lead plaintiff for the class must file their papers by August 1, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member. For more information, click here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
About Robbins LLP: Some law firms issuing releases about this matter do not actually litigate securities class actions; Robbins LLP does. A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. Since our inception, we have obtained over $1 billion for shareholders.
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