(Bloomberg) -- Mattel Inc. fell the most since 2017 as the company released guidance that disappointed investors during a conference call.

  • A measure of earnings known as Ebitda, which excludes items like taxes and interest, will be in a range of $350 million to $400 million this year, the company said in an investor presentation. While the measure may not be comparable to existing estimates from analysts that project a higher amount, shares fell sharply after the guidance was released.

Key Insights

  • The disappointing outlook marks a reversal after good news late last week heartened investors following a tough year. Mattel reported last Thursday a surprise adjusted profit as it continued to shake off the liquidation of major customer Toys “R” Us Inc. with the help of aggressive cost cutting.
  • For years, Mattel had been criticized by investors for not shifting more toward entertainment, like rival toy companies Hasbro Inc. and Lego A/S. But Mattel Chief Executive Officer Ynon Kreiz has been working to change that during his first year on the job, announcing new movies involving Barbie, Hot Wheels and on Friday: American Girl.
  • While Barbie and Hot Wheels are still seen growing this year, their momentum will slow from last year, the company said. And sales of its Thomas & Friends and American Girl lines are expected to decline.
  • Caitlin Noselli, an analyst with Bloomberg Intelligence, said investors were likely reacting to the flat sales forecast. “We were looking for some growth,” she said.

Market Reaction

  • The shares tumbled as much as 16 percent to $14.12 in New York, the biggest intraday loss since October 2017. The stock had rallied 69 percent this year through Thursday’s close, and until today was the top-performing stock in the S&P 500 Index this year.

--With assistance from Lisa Wolfson.

To contact the reporters on this story: Janet Freund in New York at jfreund11@bloomberg.net;Jonathan Roeder in Chicago at jroeder@bloomberg.net

To contact the editor responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net

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