Mattel and Hasbro both delivered disappointing forecasts for 2026. But Hasbro shares rose as much as 9% on Tuesday on the strength of its digital gaming business, and Mattel stock sank 27% on Wednesday and was on track for its worst intraday plunge in more than two decades.
The contrasting reactions underscore a widening strategic gap between the two toy giants.
While both are grappling with soft demand for traditional toys, Hasbro’s success in digital gaming has fundamentally altered its risk profile, turning a bleak forecast into a minor blip. For Mattel, the same macroeconomic warning was enough to send its shares sharply lower.
“Mattel is in the early stages of an investment similar to Hasbro’s investment in gaming over seven years ago,” D.A. Davidson analyst Keegan Cox said.
Investors in Mattel, the maker of the iconic Barbie dolls and Hot Wheels toys, were worried about the company’s exposure to the weakening toy market and the growing risk of having to hold down inventory amid uncertain retailer orders.
“December gross billings in the U.S. ended up growing less than expected,” Mattel said, implying that there were fewer fresh orders from retailers during the key holiday shopping period.
TWO PATHS, ONE FALLOUT
Mattel makes most of its revenue by selling toys: Hot Wheels cars and trucks, toddler playsets under its Fisher-Price brand, dolls, and action figures with licenses from companies such as Pixar and Warner Bros Discovery.
Consumers, however, are buying fewer classic toys and spending more on tabletop and digital games tied to hit online shows and films.
Mattel signaled on Tuesday that it was pushing into the digital gaming market, as it announced its plan to acquire the remaining 50% of a joint venture with China’s NetEase. But the initiatives are still in the early stages and also pressuring margins.
In contrast, Hasbro reported an 86% jump in its Wizards of the Coast and Digital Gaming segment revenue in the December quarter, while its operating margin grew to 45% from about 24% a year earlier.
Magic: The Gathering, the company’s flagship trading‑card franchise, posted a 141% surge in revenue.
“While investors have seen how traditional toy IP can successfully land itself into digital gaming, and the margin opportunity of that upside, Mattel’s sizable investment in digital gaming in 2026 delays the earnings upside,” UBS analysts wrote in a note.
Mattel on Tuesday said it aims to invest about $110 million in 2026, primarily directed towards digital games, and about $40 million in performance-based marketing.
LINGERING INVENTORY PILE UP
In the reported quarter, Mattel saw margin pressure due to extra discounting to clear out inventory pile-ups following a “shift in shipping patterns from direct import to domestic fulfillment,” it said on a call with analysts on Tuesday.
The company said retailers had changed the way they were placing orders due to tariff uncertainty and shifting consumer preferences.
Now, instead of forecasting demand months and managing long lead times, retailers such as Walmart are buying based on demand and forcing companies such as Mattel to hold inventory at their warehouses.
Analysts said that the inventory clearout, which is expected to bleed into the current quarter for Mattel, will add to the company’s woes.
Hasbro commands a higher forward price-to-earnings multiple of 18.95, compared with Mattel’s 12.14. Mattel’s shares were trading at about $15.23 on Wednesday.
(Reporting by Aishwarya Venugopal and Angela Christy)
