Pomerantz LLP Is Lead Counsel in a class action lawsuit against Funko, Inc. (“Funko” or the “Company”) (NASDAQ: FNKO) and certain of its officers.
The class action, filed in United States District Court for the Central District of California, and indexed under 20-cv-03130, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired Funko securities between October 31, 2019, and March 5, 2020, both dates inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under the Securities Exchange Act of 1934 (the “Exchange Act”).
Funko is a pop culture consumer products company that creates figures, plush, accessories, apparel, and homewares regarding movies, TV shows, videogames, musicians, and sports teams.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Funko was experiencing lower than expected sales; (ii) consequently, Funko was reasonably likely to incur a write-down for slower moving inventory; and (iii) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis.
On February 5, 2020, after the market closed, Funko issued a press release announcing its preliminary fourth-quarter 2019 financial results. Therein, Funko stated that “[n]et sales are expected to be approximately $214 million, a decrease of 8% compared to $233 million in the fourth quarter of 2018.” The Company also disclosed a $16.8 million writedown to “dispose of slower moving inventory to increase operational capacity.”
On this news, Funko’s stock price fell $6.20 per share, or 40%, to close at $9.29 per share on February 6, 2020, on unusually heavy trading volume.
Then, on March 5, 2020, after the market closed, Funko issued a press release announcing its fourth-quarter and full-year 2019 financial results. Therein, Funko affirmed that net sales for fourth-quarter had decreased 4% year-over-year to $213.6 million due to, among other things, “softness at retail during the holiday season which led to a decrease in orders.”
On this news, Funko’s stock price fell $0.32 per share, or over 4%, to close at $6.92 per share on March 6, 2020, thereby injuring investors further.