Background: Mattel was founded in 1945 and built its empire on physical toys like Barbie, Hot Wheels and Fisher-Price, selling in more than 150 countries. Hasbro goes back even further to 1923 and owns brands like Monopoly, Nerf and Transformers, but in recent years its real growth engine has been its digital games like Magic: The Gathering.

What happened: Both companies delivered underwhelming physical toy forecasts for 2026. Mattel expects revenue growth of 3–6%, but adjusted earnings per share could fall as much as 16%. Hasbro also guided to modest toy growth of 3–5%, below some expectations. Yet investors reacted very differently. Hasbro shares jumped 8%, while Mattel plunged 25%.

What else: The difference comes down to business mix. Hasbro’s fast-growing digital gaming division is delivering strong margins, while Mattel remains heavily reliant on traditional physical toys, which carry higher production and inventory risks.

What's the key learning

💡Sometimes the biggest upgrade is not what you sell… but how you make the money. Hasbro’s pivot into digital gaming has improved the quality of its earnings, not just the top line.

💡Physical toys carry manufacturing, shipping and inventory costs, while digital games have high upfront development costs but near-zero cost for each additional download. That scalability boosts margins.

💡Hasbro’s digital division delivered a 45% operating margin, nearly double last year, making it look more like a gaming platform than a traditional toy maker. That shift helps explain why investors rewarded Hasbro while punishing Mattel.