Barbie movie's potential $500 million haul could have huge implications for Mattel
The Barbie movie bubble is inflating faster than Wall Street expected, prompting a reexamination of the potential impact to Mattel's stock (MAT).
Stifel analyst Drew Crum estimated in a new note on Tuesday the Barbie movie — set to hit theaters on July 21 — could have a domestic box office opening weekend of $90 million to $100 million. Crum previously estimated a $50 million opening haul.
Crum thinks the strong opening weekend could lead to the flick grossing $450 million to $550 million worldwide.
Assuming $450 million (the low end of Crum's estimate) is about the figure for the movie's worldwide gross, Crum estimates Mattel could see a 10-cent profit lift this year. The sales and profits would reflect demand for Barbie dolls and licensing fees collected on apparel and other items tied to the movie.
The analyst maintained a buy rating and $26 price target on Mattel shares, about 18% above current levels.
Mattel's "Barbie" is a live-action PG-13 flick headlined by Margot Robbie as Barbie and Ryan Gosling as counterpart Ken. It was directed by Greta Gerwig and reportedly had a budget of up to $100 million.
Robbie, Gosling, and the rest of the star-studded cast have been out doing red-carpet (or "pink-carpet") events to build anticipation. (Events featuring the actors have ground to a halt, however, since Hollywood actors joined writers in striking.) The next big promotional event on the docket is slated for Wednesday in New York City at The Whitby, Yahoo Finance has learned.
"Barbie is a cultural conversation at this point," Mattel COO Richard Dickson told Yahoo Finance Live at Cannes Lions in late June.
Mattel has positioned itself to clean up on all things Barbie this year.
The toymaker has licensed the Barbie name to merchandise that is sprouting up everywhere ahead of the movie's release.
For example, there is a Barbie apparel deal with specialty retailer Gap (GPS) that hit stores on May 23. The product line ranges from pink Barbie hoodies to pink pet clothing.
Fast fashion house Forever 21 has also released a Barbie-inspired clothing line.
The other lever in play for Mattel is a future of content based on its popular toy franchises besides Barbie.
A successful Barbie debut could validate the 14 other content projects in development for Mattel, including a Skydance-backed movie based on the toy car brand Matchbox.
To be sure, investors have taken notice of Barbie mania.
Shares of Mattel are up 18% over the past month, outperforming the stock price of Transformers-maker Hasbro, which has a 4% gain.
Stifel's Crum warns the excitement around the movie will be tested when Mattel reports second quarter earnings on July 26. The quarter is expected to be challenging due to soft demand for toys during the summer.
Said Crum: "We believe anticipation ahead of the theatrical release has been a key driver behind this move, and thus profit-taking could ensue near the launch. With that said, because Barbie is the first of several pics from Mattel Films, with a stated mission to be, 'an IP-driven toy business,' we think a commercially successful movie could help investor confidence around this part of the company's strategy, and thus Barbie's performance has implications for the stock beyond just the next few days or weeks."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
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