How to Buy Mattel Stock | The Motley Fool (2024)

International brand Mattel (MAT 0.84%) is the most valuable publicly traded toy company in the world, with a market cap around $6 billion. Its brand portfolio includes icons such as Hot Wheels, Thomas & Friends, Fisher-Price, Barbie, American Girl, and Polly Pocket.

Mattel was founded by Harold "Matt" Matson, along with Elliot and Ruth Handler in 1945. The company was known first as Mattel Creations. In the early days, the company operated out of a garage in Los Angeles, a far cry from the multinational business it would become.

At the time, Mattel Creations sold items like dollhouse furniture and picture frames, but in 1947, its first commercial success selling toys came in the form of a ukulele called Uke-A-Doodle. Shortly after Mattel Creations was founded, Matson sold his stake. Elliot and Ruth Handler retained sole control of the company.

Some of Mattel's most commercially successful products came to market in the 1950s and 1960s. The first Barbie doll came to market in March 1959 and would become the top-selling toy in the history of Mattel. The company also became became a publicly traded entity in 1960.

A management shakeup occurred in 1975, when an investigation by the U.S. Securities and Exchange Commission concluded that Mattel had issued misleading financial reports during a period of financial turmoil for the company a few years prior. Ruth Handler, who was serving as CEO at the time, was indicted and convicted for stock manipulation, but received a suspended sentence. Both Elliot and Ruth Handler were barred from the company and sold the last of their holdings in 1980.

Mattel also became known for licensing characters from famous companies to make toys. These include:

• Infant and preschool plush toys after purchasing exclusive licensing and sponsorship rights from Walt Disney Co. (DIS 0.18%).
• Becoming the master licensee for Harry Potter Toys through a deal with Warner Bros, which is now part of Warner Bros. Discovery (WBD -5.73%).
• A deal to license Thomas & Friends from HIT Entertainment, a company it later acquired.

In 1970, Mattel signaled its entertainment ambitions when it formed a joint venture film production company. Eventually, that led to the creation of Mattel Television and Mattel Films.

The TV production segment has been behind the release of series including "Thomas & Friends," "Masters of the Universe," "Monster High," and of course, "Barbie." Most recently, its film production division has been instrumental in the live action "Barbie" and "Masters of the Universe" films.

How to invest

How to buy Mattel stock

Investing in Mattel stock isn't difficult because it's a publicly traded company. If you want to invest in Mattel stock, here's what you need to know.

Step 1: Open a brokerage account

If you have a brokerage account, you can simply log onto your chosen platform and purchase shares. But if you don't have a brokerage account, you can open one in a few minutes from one of any number of major financial institutions. When you choose a brokerage account, look for perks like zero-commission online stock trades, $0 maintenance fees, and low or no account minimums.

Step 2: Figure out your budget

Your budget for investing will depend on a range of factors, including your current financial obligations and investment goals. You should generally avoid investing money that you'll soon need for paying bills, credit cards, or other monthly expenses. You should also have a solid emergency fund or be building one.

Dollar-cost averaging can allow you to build your position in companies like Mattel stock over time without becoming overly exposed to a particular business or industry.

Step 3: Do your research

You should never buy shares of any stock until you've researched it and determined whether it's the right fit for your portfolio. You'll often want to review financial filings and study the business to identify its competitive advantages. By carefully researching the stocks you buy, you can ensure that what you're buying aligns with your financial goals.

Step 4: Place an order

If you're ready to buy shares of Mattel stock, search for the ticker MAT on your broker's website or app. Then, decide the dollar value of the shares you want to purchase, or if you know the precise quantity of shares you want, input that into your brokerage account's order form.

Finally, you'll need to decide whether you want to execute a limit order or a market order. A limit order tells your broker to only execute the trade if the stock hits the price you specify, whereas a market order will go through right away based on current share prices.

Should I invest?

Should I invest in Mattel?

Mattel has steadily grown through the years via expansions and acquisitions. Profitability and growth have fluctuated considerably over the decades, and sales of Barbie and other signature characters have declined at various stretches in Mattel's history. As a key vendor for Toys "R" Us, Mattel was also hit hard by the bankruptcy of this toy retailer that occurred in 2017 and 2018.

The company entered into a restructuring and growth plan in 2018, which included strategies to expand its core brands, license its franchises, grow its in-house e-commerce presence, and take advantage of new licensing deals. Mattel also benefited from the pandemic-driven spending demand, but inflation and the changes in discretionary spending have negatively affected the business in the years following.

However, with the value of its mammoth portfolio of intellectual property and household name brands, Mattel might garner considerable interest from forward-thinking investors who aren't looking for immediate gains. The company has been improving its gross margins while shrinking net losses recently, and it's looking ahead to the launch of new toys of iconic characters.

On the other hand, perhaps you're looking for a company that's less vulnerable to changes in consumer discretionary spending, you want consistent dividend income, or you're seeking a more predictable business that delivers consistent levels of profitability. If any of these are the case, you might find that investing in Mattel doesn't make sense for you.

Profitability

Is Mattel profitable?

Mattel has fluctuated in terms of profitability recently and was not profitable in the first quarter of 2024. The company did report positive net income of $214 million in the full-year 2023, which was down from the prior year's net income figure of $394 million. Adjusted earnings were down on a year-over-year basis in 2023, but totaled $948 million.

Management announced in the company's 2023 financial report that it plans to achieve cost savings of $200 million by 2026 as it intends to move to consistent profitability. The company also authorized a $1 billion share repurchase program after enacting $203 million in share repurchases in 2023.

Mattel reported a net loss of $28 million in the first quarter of 2024. That was an improvement of $78 million compared to the first quarter of 2023. The company repurchased $100 million in shares during the three-month period.

Dividends

Does Mattel pay a dividend?

Mattel does not currently pay a dividend. It suspended its dividend in 2017, around the time it was beginning to experience the negative impact of the Toys "R" Us bankruptcy, which drove sales downward significantly and necessitated a suspension of the dividend to free up additional capital.

ETFs

ETFs with exposure to Mattel

If you want to invest in Mattel without direct exposure to the stock, you might want to consider purchasing shares through an exchange-traded fund. Various funds that offer exposure to Mattel include the iShares Core S&P Midcap ETF (IJH 0.67%), the iShares S&P Mid-Cap 400 Growth ETF (IJK 0.83%), the iShares Russell Mid-Cap Value ETF (IWS 0.84%), and the iShares Russell Mid-Cap ETF (IWR 0.45%). The Vanguard S&P Mid-Cap 400 Value ETF (IVOV 0.66%) and the Vanguard Russell 1000 ETF (VONE -0.57%) are a few other examples of note.

Stock splits

Will Mattel stock split?

Mattel has gone through multiple stock splits, but its most recent split was nearly three decades ago. These splits have been as follows.

• 1996-03-04: 5:4
• 1995-01-23: 5:4
• 1994-01-10: 5:4
• 1992-06-03: 3:2
• 1991-11-18: 5:4

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The bottom line on Mattel

Mattel is a leader in the toy industry, and its entertainment divisions have been involved in some of the most popular character-driven TV series, commercials, and films in recent memory. At the same time, it's important for investors considering the stock to understand that the toy industry is cyclical. Spending in this space remains weak in the current economic environment.

Mattel has a lot of work ahead to improve profitability and its top line. On the flip side, gross margins are improving while free and operating cash flow are on the upswing. Management is also forecasting that the company's growth will outpace the broad industry and expand market share in 2024.

For investors who want a slice of the action of the value proposition of a storied toymaker and entertainment company with a house of iconic brands, that may induce some to take a position in Mattel stock. On the other hand, investors searching for steady near-term growth, dividend income, or a less risky stock may want to tread cautiously.

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