Mattel and Hasbro forecasted disappointing 2026 outlooks. Hasbro shares surged 9% on strong digital gaming performance, while Mattel stock plummeted 27%, signaling a strategic gap between the toy giants. Mattel’s push into digital gaming aims to mirror Hasbro’s success but faces challenges with inventory management and softer demand for traditional toys.

Mattel’s revenue comes from classic toys like Barbie and Hot Wheels, but consumer preferences are shifting towards digital games. Hasbro’s success in digital gaming led to an 86% revenue increase in its Wizards of the Coast segment. Mattel’s $110 million investment in digital games delays earnings upside, with margin pressure and inventory challenges.

Mattel faced margin pressure from inventory pile-ups due to shifting shipping patterns and retailer order changes. Retailers like Walmart are now buying based on demand, forcing companies like Mattel to hold excess inventory. The inventory clearout is expected to continue into the current quarter, adding to Mattel’s challenges. Hasbro’s higher forward price-to-earnings multiple reflects investor confidence in its digital gaming success.

Read more at Yahoo Finance: Mattel craters, while Hasbro’s digital pivot delivers