The pop-culture collectible giant Funko is facing significant pressure from its shareholders to explore a total sale of the company. Pleasant Lake Partners LLC, an activist hedge fund, recently disclosed a roughly 10% stake in the toymaker, a move that triggered an immediate 25% surge in the company’s stock price.
A Call for Strategic Alternatives
In a recent regulatory filing, Pleasant Lake—acting through its managing member, Fund 1—revealed ownership of approximately 5.5 million shares. The firm is now urging the Funko (FNKO) board and management to immediately investigate “strategic alternatives.”
This push includes seeking out both financial and strategic acquirers. Pleasant Lake has expressed a willingness to participate directly in any potential sale process, pointing to their successful track record with take-private transactions, such as those involving L’Occitane and Tile Shop Holdings.
Reversing a Downward Trend
The intervention comes at a critical time for the creator of the iconic “Pop!” vinyl figures. While Funko remains a staple in the collectibles market, it has struggled with a cooling toy industry and internal financial hurdles:
- Revenue Declines: The company has reported falling revenue for two consecutive years.
- Market Value Erosion: Prior to the recent stock jump, Funko’s market capitalization sat at roughly $245 million, following a disastrous year where the stock price plummeted nearly 75%.
- Softening Demand: General pressure on discretionary spending has weakened the market for bobbleheads and pop-culture figurines.
Seeking Shareholder Value
The goal of this engagement is to maximize shareholder value, which Pleasant Lake Partners believes has been severely neglected. By bringing in external acquirers or taking the company private, the hedge fund aims to stabilize the brand away from the volatility of public markets.
While Funko has not yet issued a formal response to the proposal, the market’s enthusiastic reaction suggests that investors are eager for a change in leadership or a new corporate structure to rescue the struggling brand. This development follows The Thomson Reuters Trust Principles for transparent financial reporting.
