Funko to dump $30m??

A couple of days ago Funko released a statement saying they are going to be sending $30m worth of Funko Pops to the grave!

The problem is they just have too much inventory. Usually a great problem for some of us small businesses to have, but when you're a billion dollar company sometimes you have to let go of mass amounts of inventory.

Leads you to wonder why. With so many collectors and more popping up everyday it seems crazy to just dump them. Then you start thinking about it more. The amount of shipping that it would cost, the man hours, the supplies to ship them, the logistics, it's definitely no small task.

It really just comes down to their numbers. They are in a financial rough patch. With trying to keep up with the demand of new pops for customers versus keeping the somewhat older inventory that isn't the "shiny new pop" it makes sense to dump the inventory.

Keep in mind the warehouses that are needed to even keep the inventory. When those are full to the brim with the old inventory it literally becomes impossible to get new stuff. They even started renting storage containers to house the excess inventory. There is a cost to rent, that is now higher than the cost of the inventory itself. That doesn't make sense to keep for a business that is trying to cut costs where they can.

Last year alone their inventory rose 48% from last year or $246,000,000 worth. "This includes inventory that the company intends to eliminate in the first half of 2023 to reduce fulfillment costs by managing inventory levels to align with the operating capacity of our distribution center" Funko said in a press release. "This is expected to result in a write down in the first half of 2023 of approximately $30 to $36 million."

Not to mention their Q4 loss of nearly $47m. The inventory is one thing, but they also plan on cutting their workforce by 10% which is roughly around 100 - 150 employees. They send the building process of Funkos over seas.

At the end of the day the collectibles market is still red hot! My opinion is that Funkos will soar and make a comeback before we know it. This is simply a correction in the market, a reset if you will. Sometimes the best thing you can do in business is cut your losses and start fresh again. Us, the collectors get to sit back and watch our beloved collectibles burn due to an over abundance of inventory that we probably wish we had!

Or, random left field conspiracy thought, are they being put into a dark area and waiting to come out in 10-20 years from now at an astronomical rate? We all know the amount a Pop goes up the older it gets, or at least the potential. How many buyers would line up to purchase said pops at a high rate even from Funko to turn around and flip them for even more? Remember the story of Atari dumping millions of copies of the crazy unpopular game E.T., they came back later and got over 6 figures on eBay.

It also makes you wonder why they couldn't just donate the pops to charity? Get a big tax write off for the financial trouble they currently have and they'd be making peoples days!

Next scenario would be COVID. With people sitting at home doing nothing and getting entertained by collecting a bobble head to show off to social media, Funko saw a major uptick in their sales. Meaning they wanted to start producing inventory to try and keep up with the masses. Then COVID subsided, people went back to work, and no longer had time to collect Funko like they used to. Hence overage in inventory.

Either way Funko is sliding down hill and they need to right the ship so we can continue to enjoy these amazing bobble heads!

Do you think Funko Pop will be able to right the ship? Or do you think this is the next step in an ultimately bankrupt company? You can't keep losing money and still be successful... right?