Boy is the toy manufacturer Mattel going through some tough times. Reports show that it is failing to sell to the new millennial shoppers, Lego is bigger than it and Hasboro combined, and the worst of it all – Mattel is about to lose its exclusive license to manufacture accessories related to the Ghostbusters movies.
That’s right! Just as news has surfaced about a Ghostbusters reboot with an all-woman cast this time, including such stars as Melissa McCarthy, Mattel loses its monopoly on making toys related to the films. Just when the news of new movies will certainly cause a resurgence in interest in the originals.
So to mark the end of an era, the company came out with a new toy for Comic-Con, “Ghostbusters Courtroom Battle Egon Spengler.” The character Egon was played by the late great Harold Ramis.
The toy is 6 inches tall.
As the company’s Matty Collector website describes, “The moment you’ve been waiting for all year is finally here. Do, re, Egon! When the Scoleri brothers make an unscheduled appearance before Judge Wexler (Ghostbusters 2), the professor of paranormal dispenses some justice Ghostbusters style. This commemorative 6” figure pays tribute to Harold Ramis, who created the character of the serious scientist.”
But while Mattel might have a market cap of $9 billion – along with Hasboro – a report from Goldman Sachs says that Lego outsells both companies combined. “Struggling a decade ago, LEGO now generates more EBITDA than Mattel and Hasbro combined (as of 2014), ”read the report.
EBITDA is earnings before interest, taxes, depreciation and amortization.
“While improved execution played a part, we believe the appeal of LEGO’s open-ended play pattern and emphasis on learning and development have made it a top choice for Millennial parents. More recently, the company has embraced the industry’s movement towards entertainment properties with the 2014 release of The LEGO Movie, which grossed nearly $US500mn at the box office worldwide, ” it added.
So millennial parents are looking to get their kids more educational types of toys, not the silly Barbie Doll kind that Mattel is famous for making. This means that the company will likely need to change or die.
But there is some good news for the company. Seeking Alpha is calling on people to invest in Mattel stock for the long term and sees it poised for international growth. It said that Mattel, “is a mature company with all of the benefits of one: strong, consistent cash flows, a strong buyback program, and high dividend yield.”
It also said that the company is, “well-positioned to benefit from expected increases in global toy sales due to increasing GDP per capita in developing countries.” And that its stock price is currently undervalued due to a strong market overreaction to a fall in revenue.