It seems Mattel (NASDAQ:MAT) shareholders just cannot catch a break -- unless it's in the form of a broken stock chart. It's been several days now since Mattel's surprise revelation that Q1 sales will decline caused investors to sell off the stock by 18% on Friday. Yet despite the lack of any really new news on that front, the stock is sliding once again today.
Down more than 5% in early Wednesday trading, Mattel shares are still off about 3.8% as of 2:30 p.m. EST.
So what explains investors' continuing, and apparently worsening, pessimism about Mattel stock?
As I explained yesterday, part of the reason is that Wall Street is beginning to lose faith in the company. Additionally, behemoth toymakers like Mattel may be losing their attractiveness to toy buyers. Consider: According to retail intelligence platform Stackline, Mattel's venerable Barbie line of dolls retains a 21% market share of doll sales on Amazon.com, but upstart L.O.L. Surprise! dolls, made by privately held MGA Entertainment, have already grabbed a 14% market share on Amazon for themselves!
Indeed, Stackline CEO Michael Lagoni points out that while January was a good month for Barbie, with sales up 90% year over year, it was an even better month for L.O.L. Surprise!, which logged the highest growth in the dolls and accessories category -- up 131% year over year.
Check out the latest Mattel earnings call transcript.
Lagoni argues that this is illustrative of a trend in which the toy industry as a whole "is being reshaped quickly by the rise of e-commerce platforms that provide new opportunities for smaller brands and manufacturers to gain a foothold in a category once dominated by giants like Hasbro and Mattel."
While some investors may be hoping that bankrupt Toys R Us will pick itself up, dust itself off, and ride to the rescue of toymakers like Mattel, Lagoni believes that to the contrary, "[C]hain brick-and-mortar is not the future of this industry." Rather, "fueled in large part by greater access to distribution and sales channels that have increasingly powerful toolkits for independent sellers and brands," now is the time for new entrants to shine.
That's great news for consumers seeking novel toys to buy for their tots. It may be less great news for traditional toymakers like Mattel.