Funko stock tanks by 50% after earnings miss

Yahoo Finance Live anchors discuss why Funko stock is plummeting on Friday.

Video Transcript

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BRAD SMITH: Welcome back. It's time for "Cut for Time," and today we focus in on three separate earnings reports, one minute each. So let's start with this on the day. Shares of Funko, ticker symbol FNKO, it's down bad right now after--

JULIE HYMAN: Oh, my gosh.

BRAD SMITH: --missing-- yeah, oh, my gosh, indeed. Missing on profit estimates and slashing guidance, reducing their profit forecast ahead of the holiday season. Shares moving in a manner that would make everyone bobble their head. As we're taking a look at the activity on the day, it's down by 50% here. Shrug?

BRIAN SOZZI: Ah, stunning. It's just stunning. And it's not-- I don't think the demand met the company's expectations we should also note that JP Morgan now downgrading the stock. I guess that would happen when your stock loses 50%. But they are implementing a lot of new, I think, just processes and machines and technology inside the company to set the foundation for whatever they're looking to do in the future. But this is a massive, massive day of value destruction for Funko.

JULIE HYMAN: It seems like it's not as much the sales that are the problem. It's the profitability that's the problem. The EPS and EBITDA really had a big miss here. And the company is now expecting an adjusted EBITDA margin in high single digits for the full year. Previous guidance was around 14.6% if you look at the midpoint.

[BUZZER]

So that's a big downgrade.