Insights

Why Mattel Stock Rocketed Higher on Wednesday

What happened
Shares of Mattel (NASDAQ: MAT) charged sharply higher on Wednesday, surging as much as 13.4%. As of 10:32 a.m. ET, the stock was still up 10.2%.
The catalyst that sent the toymaker higher was a report that Mattel had held discussions with some high-profile firms about potentially going private.
So what
Over the past several months, Mattel has held informal talks with several private equity bigwigs — including Apollo Global Management and L Catterton, among others — about potentially taking the company private, according to a report in The Wall Street Journal.

Image source: Getty Images.

The report comes just months after CEO Ynon Kreiz announced to the world, “Our turnaround is complete. We are now in growth mode.” The toymaker’s recent financial results appear to support his assertion. In 2021, Mattel reported revenue that had grown 19% year over year to roughly $5.4 billion. Additionally, rigid cost controls dropped more to the bottom line, resulting in net income of $903 million, up a staggering 631%. 
The news also comes in the wake of an extremely high-profile win for Mattel. The company revealed back in January that it won back the license for the Disney (NYSE: DIS) Princess and Frozen toy lines, which Mattel had lost to rival Hasbro (NASDAQ: HAS) back in 2016. It’s estimated that losing the sales from those extremely lucrative franchises cost Mattel $440 million annually. 
Now what
It’s been a wild ride for Mattel investors in recent years. The company had been in a downward spiral, falling into value stock territory, after plummeting roughly 80% between 2016 and early 2020. The far-reaching turnaround has been dramatic, as Mattel cut more than $1 billion in costs, shuffled its leadership, and breathed new life into its faltering Barbie franchise. Since its bottom in March 2020, Mattel stock has risen more than 200%.
Any potential deal to take Mattel private would have to be considerable, particularly given the company’s market cap of more than $8 billion after the market close on Tuesday.
Investors will be watching Mattel’s results closely for signs of continued success when the company releases its earnings today after the market close.
Danny Vena owns Hasbro, Mattel, and Walt Disney. The Motley Fool owns and recommends Walt Disney. The Motley Fool recommends Hasbro and recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy. –

What happened

Shares of Mattel (NASDAQ: MAT) charged sharply higher on Wednesday, surging as much as 13.4%. As of 10:32 a.m. ET, the stock was still up 10.2%.

The catalyst that sent the toymaker higher was a report that Mattel had held discussions with some high-profile firms about potentially going private.

So what

Over the past several months, Mattel has held informal talks with several private equity bigwigs — including Apollo Global Management and L Catterton, among others — about potentially taking the company private, according to a report in The Wall Street Journal.

Image source: Getty Images.

The report comes just months after CEO Ynon Kreiz announced to the world, “Our turnaround is complete. We are now in growth mode.” The toymaker’s recent financial results appear to support his assertion. In 2021, Mattel reported revenue that had grown 19% year over year to roughly $5.4 billion. Additionally, rigid cost controls dropped more to the bottom line, resulting in net income of $903 million, up a staggering 631%. 

The news also comes in the wake of an extremely high-profile win for Mattel. The company revealed back in January that it won back the license for the Disney (NYSE: DIS) Princess and Frozen toy lines, which Mattel had lost to rival Hasbro (NASDAQ: HAS) back in 2016. It’s estimated that losing the sales from those extremely lucrative franchises cost Mattel $440 million annually. 

Now what

It’s been a wild ride for Mattel investors in recent years. The company had been in a downward spiral, falling into value stock territory, after plummeting roughly 80% between 2016 and early 2020. The far-reaching turnaround has been dramatic, as Mattel cut more than $1 billion in costs, shuffled its leadership, and breathed new life into its faltering Barbie franchise. Since its bottom in March 2020, Mattel stock has risen more than 200%.

Any potential deal to take Mattel private would have to be considerable, particularly given the company’s market cap of more than $8 billion after the market close on Tuesday.

Investors will be watching Mattel’s results closely for signs of continued success when the company releases its earnings today after the market close.

Danny Vena owns Hasbro, Mattel, and Walt Disney. The Motley Fool owns and recommends Walt Disney. The Motley Fool recommends Hasbro and recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.

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