A movie box office surprise in 2023 was the movie, Barbie. The movie about a doll that escapes to and has to deal with the real world grossed $1.38 billion in theaters in the first six weeks after its premier. It is the highest grossing Warner Brothers picture ever. While Warner Brothers is happy with the movie so far, toy maker Mattel is ecstatic. Its stock is up twenty percent in the last two and a half months. Two things are responsible for Mattel’s stock going up. It has been selling Barbie dolls since 1959. Its sales of the doll are up. More to the point, Mattel intends to take advantage of the intellectual property in its toy line to make more movies. So, is Mattel a good investment or are we too late to make any money on the stock?
Mattel Stock Over the Years
Mattel had its beginning in a garage in Los Angeles in 1945. It became a publicly traded company in 1960 and traded on the New York Stock Exchange three years later. The company today trades primarily on the Nasdaq market. It has a $7.63 billion market cap. It has a 34.44 P/E ratio and does not pay a dividend. Forty years ago a share of today’s stock sold for $2.22. It peaked above $40 in 1998 and 2013. During the Covid crash it fell to $8.25 a share.
What Is the Value of Mattel’s Intellectual Property?
Marvel Entertainment is a subsidiary of Disney today. However, it began as Timely Comics which became Marvel Comics. Over the years characters from the comics were featured in movies. Marvel made money from licensing their intellectual property. In a New York Times article about Mattel’s windfall from Barbie it becomes clear that Mattel has intellectual property that can help create years of profits through the movies. The Times estimates that Mattel will earn about $100 million in its percentage of movie sales alone for Barbie. In addition they will earn more as producers of the movie and for intellectual property rights.
What Is the Next Mattel Movie?
Mattel has a dozen films in the works in addition to the just released Barbie blockbuster. Their goal is to mimic not only Marvel Studies but the “Transformer” movies or the Universal Pictures hotrod series, Fast and Furious. The iffy part of all this for an investor is that while making movies is always possible, creating blockbusters that are long term income streams is something else. The good part about investing in Mattel is that they have a huge and popular product line. The bottom will never drop out of the stock because they will always be selling toys. To the extent that Barney the Dinosaur, Hot Wheels or Masters of the Universe can be made into movies that make money with every new episode, Mattel will be able to beef up its income stream and increase toy sales along the way. As well as Barbie did, there could even be follow ups based on the original. One might get tired of Barbie 2, Barbie 3, and Barbie 4 but Mattel would not get tired of continual profits.
Should You Invest in Mattel?
If you are looking for short term profits from Mattel you are too late. The stock actually started going up at the end of 2022 with the pre-release hype for the Barbie movie. The stock does not pay a dividend and is now trading at about half of its all time highs. What would likely fuel another rally for this stock would be proof that more than one movie could make profits from the Barbie theme and that more than one of Mattel’s intellectual properties has the capacity to replicate the Barbie movie success on a continuing basis. To know how this works out will take another year or two or three. In the meantime, any investment in Mattel will not be earning dividends but will not fall off of the earth either.
SlideShare Version – Is Mattel a Good Investment?
