Please ensure Javascript is enabled for purposes of website accessibility

Is This Why Mattel Stock Was Almost 8% Higher Tuesday Morning?

By Daniel Miller – Updated Apr 17, 2019 at 10:26AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's possible that a Toys R Us revival gaining momentum has investors feeling optimistic.

What happened?

Shares of Mattel (MAT 1.01%), a global leader in the manufacture and marketing of toys -- with brands that include Barbie and Hot Wheels -- were up 7.6% as of 10:46 a.m. EST Tuesday as a Toys R Us revival gains momentum.

So what

The Toys R Us bankruptcy shocked the industry as manufacturers such as Mattel and rival Hasbro (HAS -0.69%) lost hundreds of millions of dollars in revenue, and were then hit with a double whammy when they had to sell their retail inventory into the market at substantial discounts.

That made 2018 a rough year for toymakers. In fact, while Mattel has shown the worst is behind it, other manufacturers are still struggling

A Barbie doll play set with outdoor setting.

Barbie could be spending the next holiday season back in her old neighborhood, Toys R Us. Image source: Mattel.

But toymakers are starting 2019 in a better inventory position and are more prepared to move on from the Toys R Us debacle. There's also reason for hope as that chain's comeback is gaining some momentum. Toys R Us will emerge with new ownership, and the new company, Tru Brands, says it plans to launch a "newly imagined" omnichannel retail experience in the U.S. aimed at the next holiday season.

Check out the latest Mattel earnings call transcript.

Now what

Investors would initially think that the revival of Toys R Us in one form or another would be a positive. But the hole left by its departure was quickly filled by companies such as Target, Walmart, and Amazon eager to gobble up shares of the U.S. toy market. Essentially, whether this revival helps Mattel will be determined by how successful Tru Brands is in turning its pop-up shops or retail stores into more-interactive destinations rather than only places that sell toys. For investors, it's simple: Toys R Us 2.0 can't hurt financial results in the near term -- and after a rough 2018, that's good enough.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Miller has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Hasbro. The Motley Fool is short shares of Hasbro. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Mattel, Inc. Stock Quote
Mattel, Inc.
$18.94 (1.01%) $0.19
Walmart Stock Quote
$129.70 (-1.93%) $-2.55
Target Corporation Stock Quote
Target Corporation
$148.39 (-2.24%) $-3.40
Hasbro, Inc. Stock Quote
Hasbro, Inc.
$67.42 (-0.69%) $0.47, Inc. Stock Quote, Inc.
$113.00 (-1.57%) $-1.80

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.