What Happened?
Shares of pop culture collectibles manufacturer Funko (NASDAQ: FNKO) jumped 9.8% in the afternoon session after the company reported third-quarter 2025 financial results that showed a significant beat on profit expectations, even as revenue came in below forecasts.
Investors focused on the company's profitability, which was well ahead of what analysts had predicted. While net sales of $250.9 million fell 14.3% from the previous year and missed forecasts, the company's adjusted earnings per share of $0.06 strongly surpassed the consensus estimate of a loss. Additionally, adjusted EBITDA of $24.43 million significantly outperformed expectations by over 60%. The positive market reaction suggests that investors were encouraged by the company's better-than-expected cost management and profitability, despite the challenging sales environment.
The shares closed the day at $3.33, up 10.3% from previous close.
Is now the time to buy Funko? Access our full analysis report here.
What Is The Market Telling Us
Funko’s shares are extremely volatile and have had 57 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 2.7% on the news that markets became increasingly wary of high valuations following a significant AI-driven rally.
The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector.
Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.
Funko is down 75.5% since the beginning of the year, and at $3.33 per share, it is trading 77% below its 52-week high of $14.50 from January 2025. Investors who bought $1,000 worth of Funko’s shares 5 years ago would now be looking at an investment worth $479.14.
P.S. In tech investing, "Gorillas" are the rare companies that dominate their markets—like Microsoft and Apple did decades ago. Today, the next Gorilla is emerging in AI-powered enterprise software. Access the ticker here in our special report.
