Funko stock rose on the strength of two important licensing deals announced last month. On July 12, the company informed investors that it had inked a deal with The Pokemon Company International to bring a vinyl collectible of the iconic Pikachu Pokemon character to retail shelves this summer. An initial four-inch figure will be followed by a 10-inch scale figure later in the year. The licensing collaboration gives Funko access to one of the most popular global video game characters among young children.
On July 18, Funko followed this news with the announcement that it was teaming up with privately held Epic Games to launch a range of toys and collectibles based on the viral multiplayer video game Fortnite. The collection will roll out across 10 different product lines, which, according to Funko's press release, will include "Funko's iconic Pop! figures, 5 Star figures, Pint Size Heroes, Vynl, keychains, POP! apparel and more." The Fortnite lineup is set for global release through Funko's retail partners near year-end, in time for the 2018 holiday season.
Both transactions underscore the potential of Funko to benefit from trends in pop culture. Since the company's IPO in November 2017, investors have looked for a new wave of licensing deals to supplement Funko's core evergreen properties (such as Star Wars figures, for example). The Epic Games partnership in particular illustrates the esteem to which Funko is held as the preeminent toy licensing company at present. Fortnite, in the rare event you haven't heard, is a global phenomenon, and is on track to gross roughly $2 billion in 2018 -- an amazing revenue haul for a single video game.
Funko is relatively new to the public markets and doesn't yet enjoy an extremely wide investor following. My colleague Vincent Shen and I provided a brief introduction on a recent Motley Fool Industry Focus podcast for those who want to learn a bit more about this small but intriguing company. Funko next reports quarterly earnings in just a few days, on Aug. 9, after market close.
Asit Sharma has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney, which owns the licensing rights to Star Wars figures. The Motley Fool has a disclosure policy.