David Zorub, a money manager for the $22 billion BlueMountain Capital Management, said he’s betting against shares of toymaker Mattel Inc.
Zorub said he believes the company will meaningfully disappoint sales expectations because its legacy brands are losing relevance and it will soon lose a “phenomenon” -- a license to market dolls and toys from the hit Walt Disney Co. movie “Frozen,” he said at the Sohn Canada conference presented by Capitalize for Kids in Toronto on Tuesday.
Mattel, which closed Tuesday’s trading at $21.03 in New York after a 32 percent drop this year, could decline to $10 to $14 a share, according to Zorub. Shares of competitor Hasbro Inc., which takes over the “Frozen” license in 2016, have been going in the opposite direction, up 32 percent this year.
There’s no immediate fix for a potential revenue gap at Mattel, Zorub said in his presentation, as the company’s partnerships offer significantly less movie content in the visible future.
To fill the void left by Disney Princess, Mattel is counting on a resurgence of its Barbie brand, which he said hasn’t successfully evolved with the times. Those bullish on the stock believe the company’s new management will be able to compensate for losing its Disney license by capitalizing on its lineup of iconic brands.
“Clearly we disagree with this view,” Zorub said.