- Company Name
- Funko, Inc.
- Stock Symbol
- Class Period
- Purchasers of Funko Class A common stock pursuant to the November 1, 2017 IPO
- Motion Deadline
- June 3, 2018
- Western District of Washington
The complaint charges Funko, certain members of its board of directors and the underwriters of its November 1, 2017 initial public offering (“IPO”) with violations of the Securities Act of 1933. Funko sells a broad 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. Its products combine its proprietary brands and designs into properties it licenses from content providers.
On November 1, 2017, defendants filed the Registration Statement and Prospectus for the IPO and sold 10.4 million shares of Funko Class A stock at $12 per share for net proceeds of approximately $116 million. The complaint alleges that the Company’s Registration Statement and Prospectus issued in connection with the IPO were materially misleading and failed to disclose known trends in the Company’s sales and inventory, including that Funko’s profits and growth were not as positive as the Company had represented.
On November 2, 2017, Bloomberg published an article entitled “Funko Extends Playtime to Its Accounting.” The article stated, among other things, that “[p]rofits . . . are slowing” and “just $7 million, or 10 percent, of Funko’s $69 million increase in adjusted Ebitda . . . was from actual earnings growth.” In addition, the article questioned the Company’s claim of “intellectual property worth $250 million,” which the article stated was “odd for a company whose main products are based on others’ intellectual property.” After the Bloomberg article was published, the price of Funko stock fell to $7.07 per share, a 41% decline from the IPO price of $12.00 per share. By January 5, 2018, Funko’s stock price had fallen even further, to $6.12 per share, or 49% below the IPO price.