Funko, once the 800lb gorilla in collectibles has painted a bleak picture and future after a recent filing with the Securities and Exchange Commission.

During the second quarter of 2025, Funko dropped $41 million from the previous quarter. It’s loss was just under $1 million in the third quarter but in the same period in 2024 the company saw an $8.9 million profit. The year over year revenue has dropped from $292.8 million to $250.9 million year-over-year. The losses are coming from the United State market, where the company once had its strongest customer base. It’s a stunning change in just one year.

In its SEC filing, the company said there was substantial doubt about its ability to continue for the next twelve months. The company has negotiated terms on multiple outstanding loans after earlier losses.

There is substantial doubt about our ability to continue as a going concern due to pressure on our financial covenants arising from the current tariff retail environment and potentially insufficient working capital and potential non-compliance with other covenants as defined within the Fourth Amendment, as defined herein.

In connection with preparing the unaudited consolidated financial statements for the three months ended September 30, 2025, management evaluated the Company’s future liquidity, forecasts of the expected effects of announced tariffs and other facts and conditions, and ability to comply with the covenants under the Credit Agreement, and determined that there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date of issuance of these financial statements.

Multiple factors have been given as to the company’s troubles. The retail environment including a slowing of restocking, lower inventory levels, and orders being canceled. Tariffs have also impacted things and reduced net sales and margins. Tariffs have also cooled spending by consumers. Tariffs are mentioned 28 times in one of the filings consisting of 131 pages.

We are subject to risks related to the retail industry including, but not limited to, potential negative impacts of global and regional economic downturns, changes in retail practices, and our ability to maintain and further develop relationships with our retail customers and distributors.

The effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs or export controls by other countries, continue to have an adverse effect on future net sales, margins and profitability. The Company anticipates continued supply chain challenges, cost volatility, and consumer and economic uncertainty due to these rapid changes in global trade policies.

Current macroeconomic factors remain very dynamic, including greater political uncertainty, new or increasing tariffs and general uncertainty over U.S. trade and tariff policies, unrest or instability in the United States, Central and Eastern Europe (including the ongoing Russia-Ukraine War), the Middle East (including the Israel–Hamas War), and certain Southeast Asia regions as well as financial instability, rising interest rates and heightened inflation that could reduce our net sales or have impacts to our gross margin (as defined below), net income and cash flows.

There’s also speculation the company has flooded the market with too many releases from too many properties. There’s only so much consumers can buy, stores can stock, and collectors can display.

Joe Simon, the company’s new CEO, did have a positive tone noting an improved third quarter with sales meeting internal expectations and gross margin exceeding projections. Simon highlighted the company’s Bitty Pop! line as well as the new strategy on rapid product launches to take advantage of trending pop culture moments. They are also focusing on growing markets not impacted by tariffs.

We are reviewing strategic alternatives. There can be no assurance that we will be successful in identifying or completing any strategic alternative, that any such strategic alternative will result in additional value for our stockholders or that the process will not have an adverse impact on our business.

Funko is exploring multiple options including the sale of the company as well as other changes to address its financial challenges.

• Monitor the pricing strategy and minimize increasing costs.
• Gain a positive cash flow through cost reductions and increasing the sales of higher margin products.
• Raise additional cash through the issuance of equity or debt or assessing potential amendments.

The collapse of Funko might have a ripple effect as Gamestop has seen growth in its collectible vertical including Funko as well as numerous pop-culture stores which have relied on the product line. Gamestop saw a  63% year-over-year increase in Q2 2025 collectible sales.