Hasbro ( NASDAQ: HAS ) defended its strategy around the Magic: The Gathering game at a UBS investor conference on Thursday.
The toy company had been accused by Bank of America as part of a double downgrade by the firm in October of printing too many card sets for the brand. The BofA analyst team said it has spoken with several players, collectors, distributors and local games stores and had become aware of growing frustration with the trading card game that accounts for roughly 15% of Hasbro's revenue and 35% of its EBITDA. Analyst Jason Haas noted that the primary concern it heard was that Hasbro ( HAS ) has been overproducing Magic cards which has propped up recent earnings results, but is destroying the long-term value of the brand.
On Thursday, Hasbro ( HAS ) exec Cynthia Williams stated those concerns were unfounded with no indications of broad declines in interest in the game’s products. She noted the company typically spreads out its tentpole releases of Magic: The Gathering card sets in two-month intervals, but supply chain issues resulted in two sets releasing at the same time earlier in the fall. A normal release schedule is expected in 2023 with major sets being released every two months and micro sets released in between.
"Like any market for any other collectible products, some products and individual cards do become more collectible than others and values can change over time due to a multitude of external factors, many entirely unrelated to the number of cards," she said.
Also related to the Magic brand, Hasbro ( HAS ) CEO Chris Cocks noted at the UBS conference that higher paper costs led to pricing action on about half of the line.
Seeking Alpha authors are divided on Hasbro with the last three articles producing a Strong Buy rating, Hold rating, and Sell rating.
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Hasbro talks up Magic: The Gathering strategy at investor event