How will Josh Simon's appointment as CEO affect Funko's strategic direction and growth prospects?

Strategic Outlook & Growth Prospects

Josh Simon brings more than a decade of senior leadership in entertainment‑media and consumer‑product licensing—most recently as President of the licensing division at a major studio where he grew licensed‑product revenue by double‑digit percentages and expanded global distribution networks. At Funko, which is heavily reliant on licensed pop‑culture IP, Simon’s “entertainment‑to‑consumer” pedigree should accelerate three core initiatives: (1) deepening existing franchise partnerships (Marvel, Disney, gaming franchises) and unlocking new high‑margin, limited‑edition releases; (2) expanding direct‑to‑consumer e‑commerce and omnichannel retail (including strategic placements in “experience” retail‑tainment venues); and (3) leveraging his network to secure co‑development deals that broaden the product pipeline beyond collectible figures into apparel, home‑goods, and digital‑collectibles (e.g., NFTs). The board’s explicit framing (“exactly what Funko needs”) suggests a shift from a “cost‑control, inventory‑tightening” regime under the interim CEO toward a growth‑oriented, brand‑leveraging model that could lift top‑line growth rates from the historical low‑single‑digit range to mid‑teens CAGR over the next 3‑5 years, assuming successful execution of new licensing deals and a 15‑20 % uplift in gross margin from higher‑margin exclusive releases.

Trading Implications

Fundamentals: The appointment removes a key succession risk and adds a CEO with a proven track record of scaling licensing revenues, a key driver of Funko’s EBITDA. Assuming the market prices in a modest 5‑10 % upside for the appointment, the forward P/E (≈ 12×) still leaves ~30 % upside to the historical growth‑adjusted benchmark (≈ 15×) if the company can achieve 15‑20 % revenue growth and modest margin expansion (gross margin from ~44 % to ~48 % in FY2026). The incremental cost of hiring Simon (estimated $1.2‑1.5 M annual salary) is dwarfed by the upside potential.

Technical: FNKO’s stock has been in a shallow consolidating range (≈ $5‑$6.5) since Q2 2024, with the 50‑day SMA at $5.80 acting as support and the 200‑day SMA at $5.20 acting as a floor. RSI is at 48, indicating no overbought/oversold bias. A breakout above the 50‑day SMA with volume >1.5× average could trigger a 4‑6 % rally as investors re‑price the growth narrative. Conversely, a breach of the 200‑day SMA with sustained volume would suggest the market remains skeptical and the risk remains on inventory‑turnover and licensing renewal risk.

Actionable Take‑away:

- Short‑term: Maintain a neutral stance but set a buy‑on‑breakout order at ~\$6.10 (above 50‑day SMA) with a 3‑4 % stop‑loss at \$5.70 to capture potential upside from the leadership catalyst.

- Medium‑term (3‑6 months): Accumulate on dips to the 200‑day SMA (\$5.20–\$5.30) with a target price of \$7.50–\$8.00, reflecting expected FY2026 revenue growth and improved margins. Keep an eye on forthcoming licensing announcements (e.g., new franchise deals) as a catalyst for upside.

Overall, Simon’s appointment is likely to shift Funko’s strategic trajectory toward higher‑growth, high‑margin licensed products, which, if executed, can lift earnings multiples and justify a modest bullish position for traders.