The makers of Funko Pop! collectibles are facing significant challenges that have caused the company to prepare to dispose of hundreds of thousands of its products. In a recent earnings call, the company revealed that it plans to eliminate excess inventory in the first half of 2023 to reduce fulfillment costs by managing inventory levels to align with the operating capacity of its distribution center. This is expected to result in a write-down of approximately $30 to $36 million. The company’s warehouses are overflowing with a plethora of pop culture-inspired figurines, including Machine Gun Kelly, Spider-Man, Pikachu, and various other cultural icons, and throwing them out will be cheaper than trying to sell them.
Funko’s stock price plummeted after the recent earnings call, following a string of bad news. The company’s CEO, Brian Mariotti, arrived just last year amid an executive shakeup following increasingly bad earnings news. The stock price cratered last November when Funko slashed its financial outlook for the year, and it fell by another 25 percent this week as the company revealed it would also lay off 10 percent of its employees.
Part of what seems to be contributing to Funko’s problems is that supply chain shortages, combined with extra income and time at home during the early pandemic years, spurred a temporary run on Funko Pop! sales. Now that the initial rush has subsided, the company has a ton of extra stock at the same time sales are dropping. It’s also hard not to wonder if the entire bobblehead redux has hit peak saturation.
Funko Pop! collectibles have long been propped up by a secondary speculators’ market, which tries to stay ahead of the curve on which release will end up being rare and valuable in the future. However, over the long run, 99 percent of Funkos are worthless outside of whatever depraved joy fans get from occasionally making eye contact with the ones lining their shelves. A pair of Willy Wonka Pops recently went for $100,000, but this is the exception rather than the norm.
It’s a shame to think that a ton more of these collectibles may end up in a landfill somewhere in Arizona. However, with Funko’s warehouses overflowing and sales dropping, throwing them out appears to be the most financially prudent option. It remains to be seen how Funko will weather this storm, but it’s clear that the company is facing significant challenges.