When it was first announced, the IPO for Funko was hailed as a big deal. But it didn’t turn out to be the case, with stock dropping 40% the first day of trading. OUCH.
The collectible toy giant certainly has the profits and the interest to do well – and the IPO – initial public offering, in Wall Street parlance – had a lot of blue chipper back up, like JP Morgan, and Goldman Sachs. And pr positioned the company as “Funko’s Core Competencies Are What Retail Dreams Are Made Of.” Sounds like a no miss!
But as ICv2 reports, last Thursday’s offering was a dud:
The initial offering range was supposed to be $14-$16, according to Seeking Alpha, but the IPO price was dropped to $12. In trading on the first day, shares dropped to $7.07, with a further drop to $7.00 on Friday.
The first-day drop was the biggest since 2005, and the worst for an IPO raising $100 million or more since 1995, according to the Wall Street Journal.
As it stands, Funko is now valued at $325 million – far less than the $555 million valuation that the IPO would have netted.
This doesn’t mean bad times for Funko – although a widely expected market correction in the collectible toy area might be coming soon. Also, it’s part of a trend of IPOs just not doing well – even the mighty Snapchat and Blue Apron have underperformed recently.
Not that there’s much of a comparison here, but they can take heart in that Facebook lost almost half its value from its IPO in the first year before rebounding. Facebook had a lot more upside than a toy company whose one product will eventually fade, but if they need to boost morale, there you go.
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