Hasbro shares dropped 9.86% after a Bank of America analyst downgraded the stock, claiming that the company had been over-producing the popular card game “Magic: The Gathering” (MTG).
Hasbro allegedly increased production to such a degree that the supply outweighed demand, causing decreased sales.
Bank of America claimed Hasbro had too much “greed” when it came to the success of the game. One of the bank’s analysts, Jason Haas, said Hasbro’s overproduction of Magic cards had “propped up Hasbro’s recent results but is destroying the long-term value of the brand.”
As a result, he said, “This set has devalued many high-value cards, and collectors are concerned that Wizards [of the Coast] will reprint more.”
Overproduce drives down the value of otherwise rare and collectible sets. For example, the 30th-anniversary box was sold for $999 and reportedly upset collectors due to the reproduction of rare cards.
“Not only is the price excessively high,” Haas suggested, “but the set also includes Reserved List cards which Hasbro had promised to never reprint. This has created panic among collectors and we’re seeing collections being liquidated now that the scarcity value of Magic is in question.”
In recent years, the number of Magic sets released each year has dramatically skyrocketed. In 2019 only 15 products were released, while over 39 have been slated for 2022.
In May, Joe Parlock wrote for The Gamer, “The release schedule has constrained that sense of discovery into just a month until the hot new thing rolls around, burning people out. What’s the point in looking at these new cards when something new is just around the corner anyway?”
The drop in stock prices has not been good news for Hasbro. Starting in 2022 at $102 each, company shares are now below $60.
However, some are suggesting that investors should not abandon ship on the company, with the Motley Crew suggesting people “shouldn’t make a decision to sell Hasbro based on one analyst’s opinion. Sometimes analysts are wrong. Magic could very well keep growing for Hasbro, given the pipeline of more partnerships in the works with leading entertainment brands.”
