Hasbro, Inc. (HAS) was down 2% on the Monday before the IPO, despite beating estimates for the third and third quarters of 2020. The G.I. Joe Creator posted Earnings per share (EPS) of $ 1.88 for the quarter while revenue increased 12.8% year over year to $ 1.78 billion. The sell-the-news reaction made sense as the stock was up more than 10% last week, which resulted in a blowout quarter at Mattel, Inc. (MAT), aided by increasing sales of Monopoly, Scrabble, and other traditional games.
The central theses
- Mattel and Hasbro beat estimates for the third quarter due to the positive impact of COVID-19.
- Mattel stock may have hit a single-digit generation floor.
- Hasbro stock is selling despite the bullish report but rebounding more than 10% on release.
The toy and game makers are unexpected beneficiaries of the COVID-19 pandemic as social distancing requirements force millions of families to spend more time at home with the children. Quarantined families have spiked video game sales, but many analysts were unable to predict the impact on traditional board games and toys that are now being scooped up in large quantities to keep the kids busy between online classes.
Davidson appreciated Mattel stock after the earnings report, but the consensus on Wall Street remains a “moderate buy” based on four “buy” and three “hold” recommendations. Analysts said Hasbro’s long-term outlook is better with a “Strong Buy” rating based on seven “Buy” and only one “Hold” recommendations. Both stocks open below their median on Monday Price targetsThis suggests additional upside in the holiday season.
ONE News dealer is a trader or investor who makes decisions based on announcements. Breaking news, economic reports and other reported events can only have a short-lived effect on the performance of stocks, bonds and other securities. News traders are trying to take advantage of this Basic sentiment of the market This resulted in the publication of important news and / or trading in the market’s reaction to the news after the fact.
Hasbro Monthly Chart (1999-2020)
The stock recorded several decades resistance in the 30s of 2013, an upward trend that was $ 116.20 in the third quarter of 2017. It sold through April 2018 and noted support at the 50 months exponential moving average (EMA) and successfully tested this level at the end of the year. A steady recovery wave hit previous highs in August 2019, causing a rapid rally to an all-time high near $ 127, followed by a decline that failed to break out in October.
The price campaign until February 2020 concluded a large-scale one Double topbefore a collapse that ended in March at a seven-year low in the 1940s. The fourth quarter rally pierced resistance at the 50-month EMA last week and restored double-top support near $ 80. That level should now act as a trading floor for pullbacks, which in turn increases the likelihood that the surge will eventually hit previous three-digit peaks.
Mattel Monthly Chart (1998-2020)
A multiyear uptrend peaked at $ 46.56 in 1998, marking a high that was unquestioned for the next 15 years before a deep single-digit decline in 2000. A recovery wave in the middle of the decade cut in roughly in half. These pre-stall losses in 2007 resulted in a sell-off that found support within 1.5 points of the previous 2009 low. Dedicated buyers then took control, producing a steady spike that hit the previous high in 2013.
The stock turned its tail again, adding resistance in the upper 40s in a brutal downtrend that eased from single-digit lows of 2000 and 2009 in 2018. It successfully tested this level in 2019 and again in the first quarter of 2020, establishing long-term support before a modest upswing that has now broken three years Trend line from lower heights. However, a 50-month EMA resistance at $ 16 and the broken 2015 low near $ 20 should limit gains through 2021.
ONE Double top is a highly bearish technical reversal pattern that forms after an asset has hit high prices twice in a row and has declined moderately between the two highs. It is confirmed once the price of the asset falls below a Support level equal to the low between the two previous highs.
The bottom line
Hasbro and Mattel had excellent profits and sales in the third quarter of 2020, supported by the tailwind of COVID-19.
Disclosure: The author held no positions in any of the above securities at the time of publication.