Mattel shares fall the most in 9 1/2 weeks on Monday as Bronte Capital stresses on “dysfunctional management”, heavy debt

Shares of Mattel Inc (MAT) registered their largest single-session loss in 9,5 weeks on Monday, after hedge fund Bronte Capital warned of “seemingly dysfunctional management” at the toy company and “too much debt”.

Mattel shares closed lower for a third consecutive trading session on NASDAQ on Monday. It has also been the steepest daily loss since February 15th. The stock went down 5.76% ($0.72) to $11.77, after touching an intraday low at $11.75, or a price level not seen since February 1st ($11.59).

Shares of Mattel Inc have surged 17.82% so far in 2019 compared with a 16.00% gain for the benchmark index, S&P 500 (SPX).

In 2018, Mattel’s stock went down 35.05%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

“Too much debt meant that Mattel found it hard to take risks, to invent new toys, to hire and nurture the talent that keeps a toy company fresh,” Bronte Capital founder John Hempton wrote in a blog post during the past weekend.

“Debt meant that Mattel had to “milk” brands, prioritising short-term cash for stock repurchase and eventually for interest payments. This led to cashing the iconic American Girl brand in for a short-term sugar hit when it was stocked in Toys R Us,” Hempton also noted.

According to CNN Money, the 12 analysts, offering 12-month forecasts regarding Mattel Inc’s stock price, have a median target of $14.00, with a high estimate of $20.00 and a low estimate of $10.00. The median estimate represents an 18.95% upside compared to the closing price of $11.77 on April 22nd.

The same media also reported that 12 out of 17 surveyed investment analysts had rated Mattel Inc’s stock as “Hold”, while 3 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Mattel Inc (MAT) are presented as follows:

Central Pivot Point – $12.80
R1 – $13.19
R2 – $13.88
R3 – $14.27
R4 – $14.65

S1 – $12.11
S2 – $11.72
S3 – $11.03
S4 – $10.33