Why Did Mattel Stock (NASDAQ:MAT) Fall Despite Blockbuster Q2 Earnings?
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Why Did Mattel Stock (NASDAQ:MAT) Fall Despite Blockbuster Q2 Earnings?

Story Highlights

Mattel posted a surprise profit in the second quarter of Fiscal 2023 results. Plus, its Barbie movie continues to draw huge crowds to theaters, making it a huge blockbuster hit.

Toy maker Mattel (NASDAQ:MAT) reported blockbuster Q2FY23 earnings. The company exceeded expectations on the top and bottom lines in the second quarter. However, MAT shares declined 1.8% in Wednesday’s after-hours trading as the hype around the Barbie movie failed to lift the namesake brand’s toy sales in the second quarter. Management cited the shift in the promotion schedule of Barbie dolls to align with the movie’s release as the reason for the lower sales.  

It is worth noting that Mattel’s first-of-its-kind live-action movie Barbie was a stupendous blockbuster hit at its opening weekend and continues to draw huge crowds to theaters. The Barbie movie has grossed $214 million in the U.S. up until Tuesday, July 25.

Other Details from Q2 Earnings

Mattel posted unexpected adjusted earnings of $0.10 per share, fabulously outpacing Wall Street expectations of posting an adjusted loss of $0.03 per share. The adjusted earnings showed a 44% decline compared to last year’s period. Meanwhile, Mattel’s quarterly revenue of $1.09 billion fell 12% year-over-year but beat consensus estimates of $1.02 billion.

Worldwide sales for Dolls rose 10% year-over-year, driven by demand for Disney Princess, Disney Frozen, and Monster High dolls. Conversely, sales of Barbie dolls during the quarter witnessed a 6% decline ($282.7 million) compared to the year-ago period.

Future Outlook

Mattel even reiterated its Fiscal 2023 guidance. MAT expects net sales to remain nearly similar to those of FY22 figures at $5.43 billion. Adjusted earnings are expected to fall in the range of $1.10 and $1.20 per share for the full year.

Following the success of the Barbie movie, the toy maker is excited about the lineup of 14 other movies based on other toy brands, including Hot Wheels. The management hopes to replicate a similar strategy in promoting the film alongside profitable tie-ups with retailers for licensing revenues.

Management Shake-Up at Mattel

Ahead of the earnings release on July 26, Mattel announced a surprise management shake-up. Mattel’s current President and COO Richard Dickson is leaving his role effective August 3, 2023. Dickson is joining fellow retailer Gap (NYSE:GPS) as President and CEO. Gap has been looking for an appropriate veteran to assume the vacant CEO post since July 2022.

Following Dickson’s departure, Mattel promoted Lisa McKnight and Josh Silverman to take on the combined responsibilities that Dickson oversaw at the company.

Is Mattel a Good Stock to Buy?

Recently, Jefferies analyst Andrew Uerkwitz reiterated a Hold rating on MAT stock and set a price target of $21 (1.5% downside potential).

Apart from Uerkwitz, the other three analysts who rated MAT stock have given it a Buy rating. Overall, Mattel stock has a Strong Buy consensus rating on TipRanks. The average Mattel price target of $23 implies 7.9% upside potential from current levels.

MAT stock is up 19.2% year-to-date, mainly owing to the buzz surrounding the Barbie movie release.



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