Barbie maker's stock plunges, Wall Street downgrades. What went wrong?

Shares of toy maker Mattel fell 28% in trading on Wednesday, February 11. The company failed to meet analysts' expectations for both revenue and profit during the holiday season. The weak reporting convinced analysts at Citi and JPMorgan to downgrade the shares of the Barbie and Hot Wheels rights holder: the first refused to recommend buying the securities, while the second now directly advises selling.

Mattel's stock price was down 28.5% to $15.05 during trading on Wednesday. This is the lowest price since April 23, 2025. In the afternoon, the decline slowed to 24%.

Mattel's fourth-quarter revenue rose 7% year-over-year to $1.77 million, but Wall Street expected sales of $1.84 billion, according to FactSet, CNBC writes. Adjusted quarterly earnings came in at $0.39 per share versus analysts' projections of $0.54. Net income decreased by $35 million to $106 million.

For the full year 2025, revenue was $5.35 million, down 1% from 2024. Adjusted earnings per share decreased to $1.41 versus $1.62 a year earlier.

The company's forecast for 2026 was also significantly below market expectations, with Mattel expecting adjusted earnings in the range of $1.18 to $1.3, while the consensus from FactSet was $1.77, CNBC noted.

Citi after the publication of the reports refused to recommend buying shares of Mattel, writes CNBC. The investment bank downgraded their rating to neutral and lowered the target price from $25 to $16, which implies a decrease of 24% from the closing price on Tuesday, February 10. Despite the possible appeal of the stock correction to individual investors, Citi analyst James Hardiman took a cautious stance, "The investment thesis on Mattel has changed dramatically and significantly. Management has a lot of work to do to shape a new strategy and realize opportunities."

According to Hardiman, Mattel's quarterly report looks particularly unfavorable against the backdrop of excellent results of rival Hasbro. "In the long term, the 2026 investment should pay off, but the need for a 'transition' year to somehow sustain growth is renewing investor concerns about demand for traditional toys," he added. - Especially after Hasbro's strong report, the viability of Mattel's portfolio will inevitably come into question in an industry where the split between leaders and laggards is widening."

JPMorgan analyst Christopher Horvers looks at the company's securities even less positively: he downgraded Mattel shares from neutral to "below market" (Underweight). His new target price is $14 instead of the previous $23. He attributed his decision to Mattel's disappointing outlook and weak trend outlook for key brands including Barbie and Fisher Price.

"Mattel's results are heavily dependent on the underlying toy business, especially the Barbie brand ($1.2 billion in 2025 gross revenue), which is in decline after a decade of strong innovation and the huge success of the 2023 movie," said Horvers. - It's hard for Ma to show overall positive momentum when that brand is declining: -11% in 2025 after -12% in 2024. The company expects to slow the decline in 2026 and only regain growth by 2027."

Analysts' opinions on Mattel shares differ, but the most popular recommendation is still to buy, FactSet shows. The stock has five Buy and two Overweight ratings versus four Hold and one Sell. The Wall Street consensus target price is $19.9 per share, down 5.5% from the closing price on Feb. 10.

This article was AI-translated and verified by a human editor