Are Toy Stocks a Good Idea Again?

Toy companies have taken a hard hit this year as the pandemic struck and while kids stuck at home did need toys for stimulation, money in most households went towards purchasing essentials and other necessary materials. In comparison to actual toy companies, video gaming stocks performed far better in the lockdown. While toy companies performed poorly this year and did not make the profit they usually would have, it is still expected that the next year will help in recovering their losses with the vaccine now starting to be provided to the people. Some of the toy stocks which took a hit this year but are still worth considering are:

Hasbro, Inc. (NASDAQ: HAS)

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Hasbro Inc., is a Rhode Island based American multinational conglomerate which provides products in three main areas, consumer products, gaming, and entertainment. It initially began as a toy company and later added games and has recently been seen in shifting towards digital entertainment. The company is well acquainted with name brands and is trying to acquire the Transformers franchise. Hasbro also gained Boulder Media and Entertainment One in 2016 and 2019 respectively. And it is also currently producing a series and a feature film for Netflix.

But Hasbro’s revenue fell by 29 per cent since the pandemic began and the company lost $333 million which forced to halt many of its projects. It did earn in classic games such as Jenga and Battleship which people bought even during the pandemic and in this category, its grew 11 per cent year over year which proves how it is vital to the growth of the company. Yet it is still not enough as its stock is down by 28 per cent year to date.

Mattel Inc (NASDAQ: MAT)

Mattel is one of the leading toy companies in the world and it is also the creator of the classic Barbie doll. But unfortunately, Mattel’s share price has gone down by 67 per cent in the past five years due to heavy costs and less demand which has impacted the country’s performance. With its new CEO in place since 2018, the company was making substantive efforts to get back into the race and its sale trends were improving as in 2019 when it increased its market share for the fourth quarter.

Like the rest of its peers, 2020 has been a difficult year for Mattel as well and its sales dropped by 14 per cent year over year in the first quarter. Mattel’s stocks had barely started to improve last year with a 1 per cent increase in sales, 9 per cent increase in Barbie sales and 14 per cent increase in Hot Wheels sales. And the company had the most profitable year since 2016 because it removed $875 million in costs and profited $39.2 million last year. But this year has proven to be a set-back since Mattel’s supply chains are disturbed and the delayed releases of its planned products due to movies getting delayed as well. But Mattel is hopeful with the holidays around the corner that parents will want to buy again.

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