Shares in Funko — the Everett, Wash. maker of Pop! figurines — hit an important milestone Friday, continuing a rebound from one of the worst starts for a public company in recent memory.
Funko stock closed the day at $12.55 on Friday, marking the first time the closing price has exceeded the company’s original IPO pricing of $12 per share, set last year. Funko’s stock turnaround has been several months in the making, reversing a rough reception from Wall Street out of the gate.
When the company debuted on the Nasdaq stock market last November, its stock dropped 44 percent. Renaissance Capital called it the worst first day for a public company in 17 years. Following the IPO, Funko CEO Brian Mariotti said that investor reactions, whether positive or negative, won’t make the company change direction overnight.
“I told our employees, no matter what happens, whether the stock goes up, or the stock goes down, it’s kind of irrelevant because we haven’t changed anything that we said we are going to do in the future or what we are currently doing now,” Mariotti said last year. “If you pay attention to something like that and it changes what you are, all of the sudden you have a risk of being unsuccessful.”
Funko President Andrew Perlmutter addressed the Wall Street disconnect in a recent interview with GeekWire, saying, “we are not a straightforward company as far as our story is concerned.” Funko isn’t exactly a toy company or a collectibles company. The company aims to be at the center of pop culture with licenses for everything from Dr. Seuss to Game of Thrones to the NFL.
“We see ourselves as the purveyors of pop culture,” Perlmutter said. “We are trying to deliver solutions because we believe everyone is a fan of something.”
Investors have responded to this characterization of the company as a pop culture fixture. Growth in sales from popular product lines like Avengers Infinity War, Star Wars, Harry Potter and more have some investors excited about the company. Others see potential in the company because “millennials don’t want to grow up,” extending the target demographics of Funko’s products.
Perlmutter touted the company’s international growth. In January 2017, Funko acquired London-based Underground Toys Limited, which develops and manufactures merchandise from geeky brands like Star Wars, Marvel, DC Comics, and Doctor Who. This acquisition gave Funko a beachhead in Europe as part of an international expansion.
Funko’s Wall Street rebound is clouded somewhat by a series of lawsuits the company is facing related to the run-up to its IPO. The company has been sued by investors alleging Funko overstated its growth and prior to going public last year, with the latest coming just this week from shareholder rights law firm Robbins Arroyo LLP.
Perlmutter said the lawsuits will have no impact on how the company operates. He added that all its financials have been audited by global professional services firm Ernst & Young, are within generally accepted accounting principles (GAAP) and are watched closely by the U.S. Securities and Exchange Commission.
“We believe these are wholly without merit,” Perlmutter said of the lawsuits. “And we think it’s an opportunistic attempt to misrepresent the facts.”