Mattel’s shares have surged 33% ahead of the release of ‘Barbie,’ but the boost in sales is anticipated to occur later this year.
Mattel's shares have surged 33% ahead of the release of 'Barbie,' but the boost in sales is anticipated to occur later this year.
Barbie Film Generates Positive Buzz and Boosts Mattel’s Market Value
Directed by Greta Gerwig and starring Margot Robbie, the highly anticipated Barbie film has already made headlines by selling $356.3 million in theater tickets globally. This successful performance of Barbie is not only good news for theaters but also for Mattel, the El Segundo, California-based company behind the iconic doll. As a result, Mattel’s market valuation has increased by more than a third since hitting a recent low in March, leading to a 1.8% climb in its shares.
However, while Barbie’s success on the big screen is garnering attention, industry analysts estimate that Mattel’s sales may take a hit in the second quarter. With a projected 19% decline to $1 billion, the company is expected to report a loss of 3 cents per share. This downward trend can be attributed to the overall slump in toy sales caused by the pandemic. During the height of the pandemic, parents and retailers stocked up on toys as children were confined at home. Now, with consumers cutting back on spending, retailers are faced with excess inventory, leading to price reductions on toys.
Mattel, like its competitors, is aggressively looking for new revenue streams. The company has struck 100 brand partnerships, collaborating with companies such as Gap Inc. and flooring company Ruggable. However, Mattel only receives a fraction of the revenue from licensed products, which means the company still heavily relies on sales of its own toys to drive results.
Stifel Financial Corp. analyst Drew Crum, who has a “buy” rating on Mattel shares, estimates that the Barbie film alone could generate around $100 million in revenue for the company this year. This includes an anticipated $75 million from toy sales, $13 million from product licensing, and $11 million from the film itself. The movie was financed and released by Warner Bros. Discovery Inc. as part of their deal with Mattel.
Notably, two Barbie-related toys have been listed among Amazon.com Inc.’s top 100 sellers. These include an airplane set priced at $80 and a brushable unicorn priced at $33. Although the film is rated PG-13, which may limit toy sales to some extent, the overall marketing and media attention surrounding the movie are expected to have a “halo effect” on the Barbie brand. Goldman Sachs analyst Stephen Laszczyk believes this attention will contribute to a 1.7% rise in Barbie’s sales, projected to reach $1.52 billion this year, with most of the growth happening in the second half.
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As Mattel continues to explore opportunities in the film industry, including plans for adaptations of other toy brands like Hot Wheels, it is likely that the company will gain valuable insights from the Barbie experience. Despite widespread reports that a Hot Wheels film is expected in 2025, Mattel has clarified that no official schedule has been announced at this time.
While the positive performance of the Barbie film has been a significant boost for Mattel, their shares fell 1.9% on Tuesday. Nonetheless, the overall impact of the film and the associated marketing and media attention is expected to have a lasting effect, solidifying Barbie’s status as an iconic brand.
In conclusion, the success of the Barbie film not only brings joy to moviegoers but also positively impacts the market value of Mattel. As the company faces challenges in the toy industry, diversifying into entertainment is proving to be a fruitful strategy. With more films planned for their toy brands, Mattel continues to actively explore opportunities in the evolving world of media and entertainment.