Mattel’s stock price spiked briefly on Friday, owing to a record-breaking quarter fueled by continued demand for Barbie — who has been invincible since the pandemic began.
After the opening bell, shares of the El Segundo, Calif.-based toymaker surged as much as 12% to $23.31 — the stock’s highest price since April 2017 — before slipping back to just under $21 a share, approximately where it had been trading previously.
The increase comes on the heels of Mattel’s Thursday announcement that first-quarter revenue increased 47 percent as parents continued to invest their disposable income on toys, including their coronavirus stimulus tests.
Barbie, 62, was the driving force behind the boom, with sales of the “it” baby doll increasing 87 percent year over year in the first quarter. This is the latest boost for team Barbie, which has overcome skepticism in recent years to emerge as one of the pandemic’s hottest toys.
“Barbie’s cultural relevance has never been greater,” Mattel President and Chief Operating Officer Richard Dickson said, adding that the toy company has been “leaning into diversity, inclusivity, and social effects.”
Mattel reported that first-quarter revenue increased to $874 million, up from $594 million a year earlier, exceeding analysts’ estimates of $684.2 million. Mattel’s net loss has decreased to $115.2 million, or 33 cents per share, from $210.7 million, or 61 cents per share, last year at this time.
However, the stock rally was short-lived as investors were concerned about Mattel’s ability to continue outperforming Wall Street expectations as vaccinations spread and people resume outdoor activities. Such worries are exacerbated by the fact that Mattel is approaching the “slow” time for toy sales, according to BMO analyst Gerrick Johnson.
Many investors are now advising Mattel to “sell the COVID winners” or “this is as good as it gets,” Johnson said. This is particularly true for the toy industry, which typically slows in the spring and summer.
“Seasonally, this is a good time to sell,” Johnson said of toy stocks.
Despite these worries, Mattel increased its fiscal year guidance. It now anticipates sales growth of six to eight percent in 2021, up from its previous forecast of revenue growth in the mid-single digits. Additionally, it anticipates profits to be $25 million higher than its February forecast of $825 million.
Mattel is a “growth company trading like a value fund,” according to a note published Friday by DA Davidson analyst Linda Bolton Weiser.