If you browse through the product offerings of Funko (NASDAQ:FNKO), you’ll find a wide selection of collectible figurines. Perhaps you’ve never previously considered owning shares of FNKO stock as this is a product category that market traders might not often think about.
Sure, there are more famous toy manufacturers that you could invest in. Yet, as we’ll discover, Funko is making a big pile of money from those funky-looking figurines.
Plus, Funko is planning to move beyond the physical realm when it comes to collectibles.
If you’re not sure how this is possible, stay tuned for the lowdown on Funko’s potentially game-changing venture into a red-hot niche market that’s been generating a whole lot of buzz lately.
FNKO Stock at a Glance
First thing’s first: I’m not recommending you take a huge position in FNKO stock. The stock has a five-year monthly beta of 2.38, which indicates that the stock moves at least twice as fast as the overall stock market.
In other words, this particular stock is more appropriate for a smaller position size due to its potential for volatility.
That being said, it should also be noted that the stock’s biggest moves lately have been to the upside. Just a year ago, the shares were trading at $3 and change, but you won’t likely see that price again in the near future.
The bulls really started to take control of the price action of FNKO stock in the fourth quarter of 2020, when they pushed the share price up to $10 and beyond.
Yet that was only a hint of what would happen during the first quarter of 2021. March was a particularly strong month, as bulls propelled the stock above $20.
On April 1, FNKO stock touched a 52-week high of $25.07, but then pulled back to settle at $20.96. Active traders should watch the $30 level and then look for $35 to $37 as the next likely target zone.
There’s Money in Those Toys
How lucrative is the toys and collectibles niche market? The data might surprise you.
As Funko proudly declares, the company has sold more than 250 million pop-culture products since its inception.
Furthermore, in fiscal year 2019, Funko recorded a whopping $795 million in net sales.
Now, you might be wondering how Funko’s been faring more recently. I’m glad to report that for the fourth quarter of 2020, the company’s been hitting it out of the park:
- Net sales increased by 6% to $226.5 million;
- U.S. net sales grew by 18% to $171 million; in terms of domestic sales, this represents Funko’s biggest quarter ever;
- Net income expanded by $21.2 million to $14.9 million;
- Adjusted EBITDA rose 29% to $33.2 million;
- Cash flow from operations surged 69% to $46.9 million; and
- Funko’s capital position firmed up, with the company’s total liquidity increasing by 71% year-over-year to $127.3 million.
Jumping Head-First into NFT’s
And, all of the foregoing stats were based on Funko’s fiscal performance prior to the big news we’re about to discuss.
Perhaps you’ve heard about a hot new class of commodities known as non-fungible tokens, or NFTs.
These are digital smart contracts which are stored on the blockchain. An NFT can signify a stake in something physical like a painting, photo, gem or piece of jewelry, or something non-tangible such as a tweet.
Amazingly, there’s been a report of $1 million being offered for a single tweet-as-an-NFT, and even a piece of digital artwork by an artist named Beeple that was auctioned off for an eye-popping $69.3 million.
Another example of a big-ticket NFT would be a video of LeBron James doing a slam dunk. That particular NFT apparently sold for more than $200,000. So clearly, NFT’s are a super-hot commodity right now.
Speaking of hot items, trading volume in FNKO stock spiked sharply not very long ago, due to Funko’s announcement on April 1 that the company had acquired a majority ownership stake in TokenWave.
According to the press release accompanying this announcement, TokenWave is “the developer of TokenHead, a leading mobile app and website for showcasing and tracking Non-Fungible Token (“NFT”) holdings.”
The press release also states that TokenHead currently displays more than 10 million NFTs, and that it has more than 100,000 visits per day.
Acquiring a majority stake in TokenWave is a quick way for Funko to jump headfirst into the fray with NFTs.
But let’s not forget that Funko was already generating strong revenues, even prior to the NFT craze.
Hopefully, the TokenWave stake will only add value to Funko’s already profitable business.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.