Mattel Shares Just Dropped the Most in Nearly Two Decades

Just a week after toy maker Mattel reported better than expected fourth quarter results, the company issued a warning about 2019 that sent shares collapsing.

The stock saw a drop of 18% on the news, the biggest drop in one day in almost twenty years for the company.

Mattel issued 2019 guidance on Friday at the New York Toy Fair and said it expected flat gross sales in constant currency for the year, and said weakness in its Thomas & Friends and American Girl brands would weigh on performance.

Mattel has also warned that the demand for Barbie is slowing down. Ironically it was strong sales of Barbie that helped the company’s holiday quarter profit.

For the first quarter, the company is expecting lower gross sales and expects adjusted earnings before interest tax, depreciation and amortization (EBITDA)of $350 million to $400 million for 2019. This is below estimates of $480.18 million, according to IBES data from Refinitiv.

Gross profit margins for 2019 are forecast to be in the “low 40s” range, while analysts are expecting margins of 44.2 percent.

Last week Chairman and Chief Executive Ynon Kreiz said, “We remain focused on advancing our strategy to restore profitability and retain top-line growth in the short to mid-term.”

Mattel recently signed a movie deal for Barbie which will star Margot Robbie.

“Mattel has quickly morphed their culture [under Kreiz] from being a packaged goods company back to being a children’s entertainment company making toys and creating entertainment from all of their valuable intellectual properties,” said Jim Silver, president of TTPM, a toy-review website.

Disclaimer: We have no position in Mattel, Inc. (NASDAQ: MAT) and have not been compensated for this article.