Is Funko Stock a Buy After Its 60% Selloff?
Funko (NASDAQ: FNKO) blew up last week, losing 59.4% of its value in six and a half hours of panicked selling, after the "POP" toymaker reported a big earnings miss and warned that full-year earnings will be less than half what it thought they would be just three months ago. Now that Funko has announced this nearly 60% sale (on its shares), though, doesn't that make Funko stock a bargain?
A lot of investors thought so on Monday, rushing back into the market to buy Funko stock, driving the share price back up 28.7%.
But here's the problem with math: When your stock loses 60% of its value, and then gains back 30%, you don't make back half your losses immediately -- because your 60% loss was multiplied by a bigger number, and your 30% gain was multiplied by a much smaller number. Result: As of the beginning of trading Tuesday, Funko shares were still only worth 48% of what they cost investors before earnings on Thursday.
Source Fool.com
