Funko’s $14.75M Lawsuit, Soda Cancellation, and Price Hikes: What Collectors Need to Know

Funko, the pop culture collectibles giant, is facing turbulent times in 2025, with a $14.75 million class-action lawsuit settlement, the permanent discontinuation of Funko Sodas, and significant price increases on its iconic Funko Pops. These developments, detailed in the YouTube video Funko News: Product Price Increases | Class Action Lawsuit | Funko Sodas Canceled, signal challenges for the company and its loyal collectors. As Funko navigates legal fallout, product line shifts, and economic pressures, this blog explores the implications for investors, collectors, and the brand’s future.

The $14.75M Class-Action Lawsuit: What Happened?

On April 17, 2025, Funko finalized a $14.75 million settlement to resolve a securities class-action lawsuit that began in July 2024, as reported by Top Class Actions and discussed on X. The lawsuit, filed in California, alleged that Funko misled investors about its financial health before its 2017 initial public offering (IPO) by engaging in “channel stuffing”—a practice where companies ship excess products to retailers to inflate sales figures artificially. This led to stock prices trading at inflated values, causing significant losses when the truth emerged.

Key Details of the Lawsuit

• Allegations: The plaintiffs claimed Funko concealed its reliance on channel stuffing, misrepresenting sales and inventory health. When retailers returned unsold products or sold them at deep discounts, Funko’s stock plummeted, with a notable drop from $9.85 to $8.67 per share in November 2017, per court filings. The lawsuit also cited violations of the Securities Act of 1933 for false statements in IPO documents.
• Settlement Terms: Funko agreed to pay $14.75 million, with an estimated payout of $0.57 per share for shareholders who purchased stock between August 8, 2019, and March 5, 2020. Nearly half the settlement—$6 million—covers attorney fees and administrative costs, leaving less for affected investors.
• Funko’s Stance: The company denied wrongdoing but settled to avoid further legal costs, a common strategy to limit exposure, as noted in the YouTube video. This follows prior lawsuits, including a $7 million settlement in 2022 for similar inventory misrepresentation claims.
• Context: Channel stuffing is a known issue in retail, with the Supreme Court recognizing both legitimate (e.g., offering discounts) and illegitimate forms (e.g., unsolicited shipments). Funko’s case involved allegations of the latter, damaging investor trust.

Example: It’s like a store claiming record sales by flooding shelves with unsellable goods—looks good on paper until returns pile up.

Impact on Investors

• Financial Losses: Investors who bought at inflated prices faced losses when Funko’s stock tanked. The $0.57 per share payout is modest compared to estimated damages of $80 million in the 2022 settlement, reflecting the high cost of legal fees.
• Stock Performance: Funko’s stock has struggled, halving to around $4 in early 2025 after tariff announcements and lawsuit news, per the YouTube video. Despite a Q3 2024 net income of $4.6 million, down from a $16.2 million loss in 2023, investor confidence remains shaky.
• Sentiment on X: Posts from users like @DisTrackers and @pop_holmes on April 18, 2025, reflect mixed feelings, with some collectors unaware of the lawsuit’s scope, focusing instead on Funko Pops’ collectible value.

This isn’t Funko’s first legal rodeo—lawsuits in 2018 and 2020 also alleged misleading IPO statements, though a Washington case was dismissed in 2020. The recurring scrutiny suggests systemic issues in transparency, as noted by Reuters.

Funko Sodas Discontinued: A Blow to Collectors

Funko Sodas, a fan-favorite product line launched in 2020, have been permanently discontinued, with the section removed from the Funko Shop website. This decision, confirmed in April 2025, has disappointed collectors who valued the limited-edition vinyl figures with chase variants.

Why Were Funko Sodas Canceled?

• Declining Demand: The YouTube video explains that Funko removed piece counts (e.g., limited to 5,000 units) in 2023 to produce more units without raising prices, aiming for higher profits. This eroded the line’s exclusivity, a key selling point, leading to reduced interest.
• Tariff Pressures: Proposed tariffs on Chinese imports, where Funko manufactures most products, likely contributed, as rising costs made low-margin lines like Sodas less viable. Funko’s email to retailers, cited in the video, hinted at tariff-driven decisions.
• Strategic Shift: Funko is pivoting to high-performing lines like Funko Bitty Pops, which have gained popularity for their affordability and variety, as seen in Q3 2024 sales data.

Collector Impact

• Community Reaction: Collectors on X, like @CTropes, lamented the loss, with some citing Funko’s 2023 inventory write-off of $30 million as a sign of mismanagement. Sodas were Funko’s second-most popular line, and their cancellation risks alienating fans.
• Market Dynamics: Existing Funko Sodas may rise in value due to scarcity, but the line’s end could deter new collectors, as noted in collector forums.
• Alternatives: Funko’s focus on Bitty Pops and other lines aims to offset losses, but the video warns that mishandling these could repeat Soda’s fate.

Example: It’s like a restaurant axing its signature dish to cut costs—loyal customers feel betrayed.

Funko Pop Price Increases: Tariff Troubles

Funko Pops, the backbone of the company’s $1 billion-plus revenue, are seeing price hikes in 2025, driven by external pressures and retailer decisions.

Details of the Price Hikes

• Retailer Actions: Entertainment Earth, a major Funko distributor, raised common Funko Pop prices from $12 to $16.99, affecting new releases like Superman and Elio figures, as well as older inventory. The video criticizes this move for older stock, which was purchased at lower wholesale costs.
• Funko’s Pricing: Funko’s official site maintains common Pops at $12, exclusives at $15, and covers at $30, but the Pop Yourself line jumped from $30 to $40, a $10 increase that collectors find steep given limited customization options.
• Tariff Impact: Funko’s email to retailers, referenced in the video, attributes price pressures to proposed tariffs on Chinese goods, increasing production costs. Entertainment Earth’s preemptive hikes anticipate wholesale price rises if tariffs persist.
• Market Trends: The video notes Funko’s stock fell to $4 after tariff news, reflecting broader retail struggles. A 2024 Retail Dive report confirms tariff fears are driving price adjustments across collectibles.

Collector and Retailer Implications

• Collector Burden: A $5 increase per Pop adds up for avid collectors, potentially reducing demand. X users like @SkittleRampage report frustration, though some accept inflation-driven hikes.
• Retailer Strategy: Entertainment Earth’s decision to raise prices on older stock risks alienating customers, as it appears profit-driven rather than cost-driven. Other retailers may follow if tariffs are implemented, per the video.
• Funko’s Challenge: Balancing affordability with profitability is critical. The Bitty Pop line’s success suggests Funko can innovate, but price hikes could erode its mass-market appeal.

Example: It’s like a coffee shop charging more for old beans—customers question the fairness.

Timeline of Events

To contextualize Funko’s challenges, here’s a timeline:

• November 2017: Funko’s IPO at $12 per share is followed by a 41% stock drop after Bloomberg questions its accounting, sparking lawsuits.
• 2022: Funko settles a $7 million lawsuit over inventory misrepresentation.
• 2023: Funko writes off $30 million in excess inventory, removes Soda piece counts, and reports a $46.7 million Q4 loss.
• July 2024: Class-action lawsuit alleges channel stuffing and IPO misstatements.
• Q3 2024: Funko reports $292.8 million in sales and $4.6 million net income, but stock struggles.
• April 2025: Funko settles for $14.75 million, cancels Funko Sodas, and faces price hikes at retailers like Entertainment Earth.

This timeline highlights Funko’s recurring legal and operational issues.

Legal and Ethical Arguments

The lawsuit and cancellations raise concerns:

• Securities Fraud: The channel stuffing allegations suggest Funko prioritized short-term stock gains over transparency, violating investor trust and the Securities Act.
• Consumer Impact: Price hikes, while tariff-driven, burden collectors, and the Soda cancellation reflects poor strategic planning, as exclusivity was its core appeal.
• Corporate Accountability: Funko’s denial of wrongdoing despite multiple settlements raises ethical questions. A 2023 Law360 report notes similar patterns in retail securities fraud.
• Precedent: The $14.75 million settlement aligns with a 2023 Funko case in Delaware, where plaintiffs received $2,500 each, showing courts are holding companies accountable.

Example: It’s like a team cheating to win a game—short-term gains, long-term distrust.

Broader Implications

For Investors

• Financial Risk: The settlement and stock decline (down to $4) signal ongoing volatility. Q3 2024’s $292.8 million in sales shows resilience, but tariffs threaten margins.
• Recovery Potential: The video predicts a stock rebound as markets adjust to tariffs, but investor lawsuits may persist if transparency issues continue.

For Collectors

• Cost Concerns: Price hikes could reduce collecting frequency, especially for budget-conscious fans. The Soda cancellation may shift focus to Bitty Pops or secondary markets.
• Community Resilience: X posts show collectors remain passionate, with @pop_holmes celebrating Funko’s creativity despite setbacks.

For Funko

• Brand Reputation: Legal battles and product cancellations risk alienating fans, but pivoting to Bitty Pops and maintaining core Pop prices shows adaptability.
• Industry Trends: The collectibles market, valued at $402 billion in 2023 (Statista), faces tariff pressures, but Funko’s licensing strength (e.g., Marvel, Disney) supports growth.

Example: It’s like a band losing a hit song but banking on new tracks to stay relevant.

Challenges Ahead

• Legal Scrutiny: Funko’s history of lawsuits (2018, 2020, 2022, 2025) suggests ongoing investor distrust, per Reuters. Future litigation could strain finances.
• Tariff Uncertainty: If tariffs raise production costs, Funko may need to relocate manufacturing or absorb losses, both costly, as noted in Retail Dive.
• Collector Retention: Price hikes and Soda’s end could push fans to competitors like Hasbro, though Funko’s brand loyalty remains strong.
• Stock Recovery: At $4, Funko’s stock is vulnerable, but Q3 2024’s 40.9% gross margin indicates operational health if external pressures ease.

Example: It’s like a ship weathering a storm—sturdy but facing rough waves.

Lessons for Collectors, Investors, and Funko

• For Collectors: Monitor retailer prices and focus on high-value items like exclusives. Join communities like Funko’s Patreon Discord for restock alerts, as suggested in the video.
• For Investors: Review Funko’s quarterly reports (e.g., investor.funko.com) for transparency. Past lawsuits highlight the need for due diligence.
• For Funko: Restore trust through clear communication, as seen in its tariff email to retailers. Prioritize popular lines like Bitty Pops to retain fans.
• For All: Follow trusted sources like Top Class Actions, Retail Dive, or The Fashion Law for updates, avoiding unverified X posts. File FTC complaints if misled by pricing, as 1,200 consumers did in 2024.

These steps can mitigate risks and foster informed decisions.

Conclusion: Funko’s Rocky Road Ahead

Funko’s $14.75 million lawsuit settlement, Funko Soda cancellation, and price hikes reflect a company grappling with legal, economic, and strategic challenges. The channel stuffing allegations expose transparency issues, while tariffs and retailer decisions strain collectors’ wallets. Yet, Funko’s pivot to Bitty Pops and Q3 2024 financial gains show resilience. As the collectibles market evolves, Funko must balance innovation with affordability to maintain its fanbase.

Stay updated via Top Class Actions or Retail Dive, and share your thoughts: Are Funko’s price hikes justified, or is the Soda cancellation a misstep? The pop culture giant’s next moves will shape its legacy.

Sources:

• Funko News: Product Price Increases | Class Action Lawsuit | Funko Sodas Canceled (YouTube, April 17, 2025).
• Top Class Actions (April 18, 2025).
• Retail Dive (August 6, 2024).
• Law360 (October 4, 2022).
• Reuters (August 6, 2020).
• Posts on X (April 18, 2025).