Tracking The Toys – FNKO, HAS, JAKK, MAT
Hasbro (HAS) – We recently reviewed the Q4 earnings report from February 10th where in terms of segment performance, Wizards of the Coast revenue grew 86%, driven by Magic: The Gathering, which was up 141% behind the strength of Avatar: The Last Airbender and Final Fantasy’s holiday release. Management would simply state, “We have a powerful lineup in 2026.”
Funko (FNKO) – Shares would close higher by 18.55% on Friday following the news that Pleasant Lake Partners disclosed a roughly 10% stake in toymaker Funko and said the company should consider strategic alternatives, including the possibility of a sale, according to a regulatory filing from Thursday. Pleasant Lake disclosed in the filing that it was prepared to participate in the sale process and pointed to its track record with take-private transactions, including L’Occitane in 2024 and Tile Shop Holdings in December.
JAKKS Pacific (JAKK) – Shares closed higher on Friday by 23.73% after reporting its Q4 earnings the night before. Q4 revenue of $127.1M fell 3% Y/Y (after two quarters of double-digit Y/Y drops) but was $9.8M (or 8.3%) above consensus. U.S revenue fell 7.8% Y/Y, as tariff driven issues remained and management made the conscious decision to be even less aggressive in terms of holding inventory for potential incremental Holiday orders. Meanwhile, Q4 international revenues were strong, increasing 9.9% Y/Y and accounting for 32.2% of total revenue (up 370 bps Y/Y), driven by continued new accounts/territories and the ability to leverage a conscious decision to quickly fulfil incremental orders. Small Cap Research analyst Eric Beder said that looking ahead, the potential for higher levels of content-led action Play/Dolls should begin to rise in 2026 and 2027. For Q4, despite tariffs, content driven revenue was flat, driven by initial shipments for The Super Mario Galaxy Movie, which will premiere worldwide on April 1st (the last Mario Bros. movie registered a worldwide gross of $1.36B in 2023). Furthermore, Holiday 2027 will see the launch of Sonic the Hedgehog 4 and Frozen 3., both of which have historically been key properties for JAKKS. Historically, Holiday movie launches, if successful, drive 1H revenue for associated toys.
NY Toy Fair – DA Davidson analyst Keegan Cox attended the New York Toy Fair back on January 17th and highlighted the following:
Collectibles: Investors in the toy and trading card game space have grown concerned of a potential bubble in the collector space. However, they think growing brand affinity and collector focused trends are here to stay. The analyst would reference “The Rise and Fall of the American Monoculture” by Ben Fritz, which makes the point that everyone has unique interests rather than a singular American zeitgeist like in the past. “We think this is translating in consumer behavior as fans want to express themselves through their niche fandoms. Our checks at the toy fair show the manufacturers are leaning in with collector product lines in tandem with kid-focused, playable products. Retailers are starting to buy in too, but there is still room to go on presenting the experience to the mass market.”
2026 Theatrical Releases – Content is still king and much of the hype in toys this year is centered around the 2026 movie slate, which is claimed as the strongest since 2019. The timing of the slate sets up favorably with the Disney movies spread out as inventories look clean ahead of what should be a solid year for toys. Hasbro is expecting double digit growth in Disney products with upside to the guide from outsized movie performance versus expectations. This should be a tailwind for Mattel too, along with Masters of the Universe and Matchbox movies in mid-2026. “During our booth tours, we noticed that almost all of the 2026 product was tied to pre-released or upcoming content releases, both streaming and theatrical.”