Funko, the company synonymous with those wide-eyed vinyl figures that once dominated shelves, is facing a stark reality. Recent financial filings paint a concerning picture. The company itself admits there's "substantial doubt" it can continue as a going concern for the next 12 months. That's not just corporate boilerplate; it's a flashing red light demanding a closer look. Funko Pop maker admits it might not survive another year as sales crash
The Numbers Tell a Story
The third quarter of 2025 saw net sales of $250.9 million, a 14% drop compared to the same period last year. A net loss of roughly $1 million isn't catastrophic on its own, but it signals a dangerous trend. Funko blames falling demand, higher tariffs, and tighter retailer inventories. These are real challenges, but are they the whole story?
Industry tracker ICv2 reports a 20% year-over-year plunge in Funko’s U.S. sales. That's a significant contraction, and it accounts for the majority of the overall revenue drop. This isn't a mere blip; it's a concerning deceleration of what was once explosive growth. It prompts the question: Did Funko misread the market, or did the market simply move on? I've looked at hundreds of these filings, and the speed of this decline is unusual.
Funko is carrying roughly $250 million in total debt. They've already amended their credit agreement twice in 2025 to secure covenant relief. That's not a sign of strength; it’s a company scrambling to avoid breaching its loan agreements. How much more covenant relief can they realistically expect?
Strategic Alternatives: A Sale?
Funko says it will focus on smaller product lines like Bitty Pops and Pop Yourself kiosks while "exploring strategic alternatives," including a potential sale. Translation: They're open to being acquired. But who would buy them, and at what price? The acquisition cost would need to be substantial, but who would be willing to bet on a turnaround when the core product is losing steam?
The "Alien: Earth" Funko POP! "Sheep with the Eye" is an interesting case study. A web-exclusive figure based on a niche character from a sci-fi series. It highlights Funko's diversification efforts, but also underscores the challenge. Can these smaller, targeted releases offset the decline in broader demand for their core Pop Vinyl figures?
Funko is good at making anything adorable, but somehow, even the Funko version of this sheep gives us the willies. I think that's a great testement to the creativity of the designers, but it doesn't solve the fundamental problem of declining sales.
Data Doesn't Lie: It Was a Bubble
Funko's predicament isn't just about tariffs or retail challenges. It's a classic case of oversupply meeting waning demand. The market was flooded with Funko Pops, and the perceived value of each individual figure diminished. It's like beanie babies all over again, but with a vinyl sheen. What happens when "limited edition" becomes mass-produced? The scarcity disappears, and so does the collector's frenzy. And this is the part of the report that I find genuinely puzzling. Funko's management team must have seen this coming. Why didn't they adjust production sooner?
