International brand Mattel (MAT -2.76%) is one of the most valuable publicly traded toy companies in the world, with a market cap of around $5 billion. Its brand portfolio includes icons such as Hot Wheels, Thomas & Friends, Fisher-Price, Barbie, American Girl, and Polly Pocket.
Mattel was founded by Harold "Matt" Matson, along with Elliot and Ruth Handler, in 1945. The company was known first as Mattel Creations. In the early days, the company operated out of a garage in Los Angeles, a far cry from the multinational business it would become.
NASDAQ: MAT
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At the time, Mattel Creations sold items like dollhouse furniture and picture frames, but in 1947, its first commercial success selling toys came in the form of a ukulele called Uke-A-Doodle. Shortly after Mattel Creations was founded, Matson sold his stake. Elliot and Ruth Handler retained sole control of the company.
Some of Mattel's most commercially successful products came to market in the 1950s and 1960s. The first Barbie doll came to market in March 1959 and would become the top-selling toy in the history of Mattel. The company also became a publicly traded entity in 1960.
A management shakeup occurred in 1975, when an investigation by the U.S. Securities and Exchange Commission concluded that Mattel had issued misleading financial reports during a period of financial turmoil. Ruth Handler, who was serving as CEO at the time, was indicted and convicted for stock manipulation and received a suspended sentence. Both Elliot and Ruth Handler were barred from the company and sold the last of their holdings in 1980.
Mattel also became known for licensing characters from famous companies to make toys. These include:
- Infant and preschool plush toys after purchasing exclusive licensing and sponsorship rights from Walt Disney Co. (DIS -1.07%).
- Becoming the master licensee for Harry Potter Toys through a deal with Warner Bros, which is now part of Warner Bros. Discovery (WBD +0.98%).
- A deal to license Thomas & Friends from HIT Entertainment, a company it later acquired.
In 1970, Mattel signaled its entertainment ambitions when it formed a joint venture film production company. Eventually, that led to the creation of Mattel Television and Mattel Films.
The TV production segment has been behind the release of series including "Thomas & Friends," "Masters of the Universe," "Monster High," and "Barbie." More recently, its film production division has been instrumental in the live-action "Barbie" and "Masters of the Universe" films.
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How to buy Mattel stock
Investing in Mattel stock isn't difficult because it's a publicly traded company. If you want to invest in Mattel stock, here's what you need to know.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest in Mattel?
Mattel has steadily grown through the years via expansions and acquisitions. Profitability and growth have fluctuated considerably over the decades, and sales of Barbie and other signature characters have declined at various stretches in Mattel's history. As a key vendor for Toys "R" Us, Mattel was also hit hard by the bankruptcy of this toy retailer that occurred in 2017 and 2018.
The company entered into a restructuring and growth plan in 2018, which included strategies to expand its core brands, license its franchises, grow its in-house e-commerce presence, and take advantage of new licensing deals. Mattel has faced several challenges in recent years, including declining toy sales, supply chain issues, and a competitive market. The company has also been affected by macroeconomic factors, inventory management challenges, and shifts in consumer demand.
Despite facing these headwinds, Mattel has also seen some positive developments, such as the success of the Barbie movie and the company's efforts to improve its inventory management and supply chain. Mattel faces competition from other toy manufacturers, as well as from video games and other forms of entertainment.
Kids are increasingly drawn to video games and mobile gaming, leading to a shift in consumer demand away from traditional toys. Mattel has been working to improve its inventory management practices and has been focusing on expanding its franchises and licensing agreements, which can provide a more sustainable source of revenue.
Mattel is prioritizing mobile gaming, recognizing its broad reach and low barrier to entry. They are actively seeking partnerships with developers to bring their franchises to mobile platforms. Mattel has launched a self-publishing initiative that funds and manages the development, marketing, and publishing of its own games, in addition to licensing and joint ventures.
The company is using its well-known brands like Barbie, Hot Wheels, and UNO to attract players to its digital games. Mattel has partnered with companies like Rollic (part of Zynga) and Outright Games to create and publish games. It also has a joint venture with NetEase (NTES -4.51%) called Mattel163, which focuses on mobile games based on Mattel IPs.
Overall, Mattel is facing a challenging environment, but the company has also taken steps to address these issues and is working to capitalize on new opportunities. The company reported net sales of $5.4 billion in 2024, down 1% from fiscal 2023. Yet, given the value of its mammoth portfolio of intellectual property and household name brands, Mattel might garner considerable interest from forward-thinking investors who aren't looking for immediate gains.
On the other hand, perhaps you're looking for a company that's less vulnerable to changes in consumer discretionary spending, you want consistent dividend income, or you're seeking a more predictable business that delivers consistent levels of profitability. If any of these are the case, you might find that investing in Mattel doesn't make sense for you.
Is Mattel profitable?
Mattel has fluctuated in terms of profitability recently and was not profitable in part of 2024. However, the company finished fiscal 2024 by reporting net income of $542 million for the 12-month period, a $327 million improvement from the prior year.
For the year, operating cash flow came to $801 million, a decline of $69 million, primarily driven by higher working capital requirements, but partially offset by higher net earnings.
Management previously announced in the company's 2023 financial report that it plans to achieve cost savings of $200 million by 2026 as part of a move to consistent profitability. The company authorized a $600 million share repurchase program for 2025.
Does Mattel pay a dividend?
Mattel does not currently pay a dividend. It suspended its dividend in 2017, around the time it was beginning to experience the negative impact of the Toys "R" Us bankruptcy, which drove sales downward and spurred a suspension of the dividend to free up additional capital.
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Will Mattel stock split?
Mattel has gone through multiple stock splits, but its most recent split occurred almost three decades ago. These splits have been as follows.
- 1996-03-04: 5:4
- 1995-01-23: 5:4
- 1994-01-10: 5:4
- 1992-06-03: 3:2
- 1991-11-18: 5:4
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The bottom line on Mattel
Mattel is a leader in the toy industry, and its entertainment divisions have been involved in some of the most popular character-driven TV series, commercials, and films in recent memory. At the same time, it's important for investors considering the stock to understand that the toy industry is cyclical. Spending in this space remains weak in the current economic environment.
Mattel has a lot of work ahead to improve its consistent profitability and grow its top line. For investors who want a slice of the action of the value proposition of a storied toymaker and entertainment company with a house of iconic brands, that may induce some to take a position in Mattel stock.
On the other hand, investors searching for steady near-term growth, dividend income, or a less risky stock may want to tread cautiously.
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