What happened

Investors flipped the board over on shares of Funko (FNKO -4.82%), the maker of pop culture toys and boardgames, after Funko reported second-quarter 2021 earnings last night.

Despite Funko reporting $0.36 per share in profit -- where Wall Street had predicted just $0.18 -- Funko stock got dropped for a 7.5% loss as of 1:40 p.m. EDT.  

Jack in the box opens to reveal a wad of $100 bills.

Image source: Getty Images.

So what

Sales for Q2 surged 141% in comparison to this time last year, sailing past analyst expectations for $205.2 million and rising to $236.1 million. Gross profit margin gained 250 basis points, rising to 39%, helping Funko flip from a Q2 2020 loss to a (strong) Q2 2021 profit.

Topping it all off, Funko roughly tripled last year's H1 free cash flow haul to $61.3 million generated year to date. And management noted that Wall Street's prediction that it will do only $882 million in sales this year wasn't even close to the mark -- they're going to move anywhere from $900 million to $930 million worth of product -- and earn adjusted net profits of between $1.06 and $1.19 per share.  

Now what

So what's wrong with any of that, you ask? And my answer is: Honestly, I don't see any problems here -- except for the fact that after delivering this wonderful quarter, and making those wonderful promises for the rest of this year, Funko proceeded to announce that the CEO responsible for all this good news, Brian Mariotti, will be retiring from his role to become the company's "chief creative officer" instead.

Taking his place as CEO will be current company president Andrew Perlmutter, who takes office on Jan. 3, 2022.  

Granted, all of the above is described as part of a "phased transition period" at the top of Funko, and granted too, the company is telegraphing the news way out in front of when the change will actually take place. This isn't a sudden management change. No one's being fired, or criticized for management failures. To the contrary, it sounds like both executives are remaining with the company, and just refocusing onto different roles.

Nevertheless, the change-up seems to have upset investors, and turned what should have been a terrific day for Funko stock into something of a disappointment.