What happened

Toymaker Funko (FNKO -1.77%) reported its Q4 earnings last night -- and the stock was off to the races this morning, rising as much as 22% before hitting an air pocket and giving back most of its gains.

Funko ended the day up 5.2%, a sizable letdown after the sizable rally earlier in the day.

Stock chart goes up then comes back down

Image source: Getty Images.

So what

What set Funko off on a tear initially, and why did the shares later retreat? Let's review.

Funko more than doubled its quarterly earnings in comparison to last year's Q4, earning $0.23 per share GAAP and $0.44 pro forma. Analysts had expected the company to earn only $0.34 pro forma, making the actual results a big earnings beat. Sales for the quarter came in 38% higher, at $233.2 million.

For the full year, Funko reported a 33% increase in sales, to $686.1 million, and more than quadrupled GAAP earnings per share to $0.37, with most of that profit coming in Q4.

Check out the latest earnings call transcript for Funko.

Now what

So far, so good. CEO Brian Mariotti said, "Funko had a terrific quarter and full year, significantly exceeding our own expectations" -- all of which was true. As for this year, Funko says that in 2019, the company expects to earn between $1.05 and $1.15 per share pro forma, well ahead of Wall Street's expected $0.97 per-share profit. Management furthermore guided to full-year sales of between $810 million and $825 million -- again well ahead of the $739.5 million that Wall Street was expecting.

Considering all this good news, both actual and prospective, why did Funko stock give back so much of its early gain and end the day up "only" 5%? Blame profit-taking.

At a share price of less than $21 today and with earnings expected to come in somewhere around $1.10 this year, Funko stock is selling for only about 19 times earnings today. With analysts forecasting nearly 19% long-term earnings growth, and Funko promising much more than that (this year, at least), the stock really doesn't look expensive.

Investors who unloaded Funko stock may soon come to discover that they sold too soon.