According to Kotaku, Funko Pop dropped a bombshell last week with a “substantial doubt about the Company’s ability to continue as a going concern” warning in its quarterly report. The company is staring down $241 million in debt and just amended its credit agreement with JPMorgan Chase Bank back in July to buy time. New CEO Josh Simon, who joined in September after five years at Netflix, is pushing a “Make Culture Pop” strategy while the company posted a $1 million loss last quarter—a dramatic reversal from the $8 million profit it made a year ago. The company attributes much of its trouble to Trump-era tariffs hitting cheap overseas manufacturing, but now pins hopes on Stranger Things’ final season and its new “Bitty” mini-figure line with mystery vending machines.
The “Going Concern” Problem
When a company uses the phrase “substantial doubt about continuing as a going concern,” that’s corporate-speak for “we might not make it through the year.” It’s not just bad news—it’s the kind of language that makes lenders nervous and investors head for the exits. Funko’s basically telling everyone they might not be able to pay their $241 million debt within the next twelve months unless something drastic changes. They amended their credit agreement back in July, which sounds technical but really means they’re begging for more time from JPMorgan Chase. The fact they needed to do this tells you how serious the cash flow situation has become.
The CEO Spin Cycle
Here’s the thing about new CEOs—they always talk about transformation and multiple growth opportunities. Josh Simon’s “Make Culture Pop” strategy sounds great in an earnings call, but it’s basically the same vague corporate speak every struggling company trots out. He’s talking about leveraging their 27-year legacy and fan community, but what does that actually mean when you’re losing money and drowning in debt? The “quick strike” team he’s so proud of—the one that made the Dodgers Championship Five Pack—feels like rearranging deck chairs on the Titanic. Sure, you can merchandise pop culture events quickly, but if nobody’s buying your products, speed doesn’t matter.
The Desperation Play
Now we get to the real genius part of their survival strategy: making smaller Funkos and putting them in vending machines with a “surprise element.” Basically, they’re combining two tired trends—miniaturization and loot boxes—and calling it innovation. The Bitty Pop line feels like the kind of idea someone pitches when they’re out of real ideas. And let’s be honest—if your big turnaround plan involves vending machines and mystery toys, you’re probably in deeper trouble than you’re admitting. The company’s financial filings show just how bad things have gotten, with that $1 million quarterly loss representing a stunning reversal from previous profitability.
The Bigger Picture
Look, the collectibles market has been saturated for years. Walk into any store and you’ll see walls of these plastic figures gathering dust. The tariff explanation feels convenient—yes, Trump’s trade war hurt, but that was years ago. The real problem might be that Funko expanded too aggressively, licensing everything under the sun and flooding the market. During that earnings call, executives sounded optimistic about Stranger Things and Wicked boosting sales, but is that enough to dig out of a $241 million hole? Probably not. The most likely outcome here is either acquisition by a bigger toy company or a private equity chop shop operation. Either way, those plastic faces aren’t going anywhere—they’ll be in landfills long after the company itself is gone.
