What happened

Shares of Funko (NASDAQ:FNKO) slumped on Tuesday after the pop culture consumer products company announced a secondary offering by selling shareholders. The stock was down about 11.9% at 1:20 p.m. EDT.

So what

Under the offering, 4 million Class A shares will be sold by existing shareholders, with Funko not receiving any proceeds from the sale. JPMorgan is the sole underwriter for the offering.

A black chart with blue numbers and a white down arrow in the middle.

Image source: Getty Images.

Shareholders participating in the offering include ACON, which owns 54.5% of Class A shares, and Funko CEO Brian Mariotti, who owns 10% of Class A shares. After the offering, ACON's and Mariotti's Class A stakes will be reduced to 45.7% and 8.6%, respectively.

Now what

Insider selling isn't always a bad thing -- there are many reasons a large shareholder may be looking to unload some stock. However, the market seems to be interpreting this move as a sign that the company's largest shareholders have grown a bit more pessimistic on the stock's potential upside.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.