Why Mattel now has a problem with Barbie

Barbie manufacturer Mattel took a hit this week after its superstar doll failed to deliver.

The El Segundo company behind many of the world’s most iconic toys was walloped in the stock market — its shares plunged 25% Wednesday — after it announced that holiday-season sales were weak and that it expects another slow year.

It was overoptimistic about how many Barbies and other products consumers would want and had to slash prices to move them, even as it grappled with higher costs from tariffs, analysts said.

“2025 was marked by uncertainty,” Ynon Kreiz, chief executive of the company, said after earnings were unveiled Tuesday.

While Mattel’s Hot Wheels were hot, and its party card game Uno attracted new fans, Barbie has been struggling. Mattel’s Fisher-Price line, which makes educational toys for infants, toddlers and preschoolers, also lagged.

The doll and its many variants have been losing momentum since her latest 15 minutes in the spotlight following the 2023 hit movie “Barbie.” This year, Mattel says it will increase its focus on making more digital games and toys tied to movie franchises.

Last year, its net sales were about $5.3 billion, down 1% from the year before, according to the company’s unaudited financial statements. Its projection for this year also disappointed investors. The company lost close to $1 billion in market value as investors dumped its shares.

The movie that was the fun half of the “Barbenheimer” summer took in close to $1.5 billion at the box office and rejuvenated buzz around the 60-something Barbie, sparking more than $150 million in sales from dolls and other related products. At the time, it seemed to validate the toymaker’s strategy of turning its legacy brands into modern media properties, with live-action films. It has not been able to repeat that success yet, and that failure has weighed on its earnings.

Despite efforts to create buzz around the Barbie brand — including a diabetes Barbie and an autism Barbie — gross billings for Barbie products slid 11% last year, following a similar decline in 2024.

Mattel on Tuesday said it plans to double down on its strategy to become, as its CEO called it, an “IP-driven play and family entertainment business.” That means it wants to make more money from video games and movies.

Though toys are foundational to Mattel, the company said it is trying to broaden its reach by focusing more on content licensing and digital games, which tend to be more profitable.

Mattel has long worked with Disney to make princess dolls and has partnered with Netflix to make toys inspired by characters from the 2025 movie “KPop Demon Hunters.” The K-pop-inspired products will ship in the spring, and Mattel expects them to boost doll sales.

This week, it announced a deal to develop and market toys tied to the Teenage Mutant Ninja Turtles franchise, which is scheduled to have a new movie next year. It can also expect a jump in interest around its toys connected to the Masters of the Universe franchise and Matchbox brand, both slated to have movies this year.

“Success in our toy business will drive success in entertainment, and success in entertainment will drive greater success in toys,” Kreiz said. “We are looking to fully capitalize on this virtuous cycle.”

The company literally doubled down on one of its biggest bets on digital games.

Mattel announced plans to spend around $160 million to acquire the other half of mobile games studio Mattel 163, a joint venture between Mattel and the Chinese internet and video game company NetEase.

The studio has released four games based on Mattel’s intellectual property since it was established in 2018.

Mattel plans to make more “games based on Mattel IP that drive sustained engagement for fans,” Kreiz said in a statement.

The acquisition will temporarily impact Mattel’s bottom line but is intended to “accelerate growth in top and bottom lines in 2027 and beyond,” Kreiz said on the call.

For some, Mattel’s big plans to diversify away from toys haven’t been successful enough to spark confidence that the company can pull it off this year.

Morningstar analyst Jaime Katz said Mattel’s digital strategy has not panned out in the decade since company leadership started touting it.

“Every year we’re expecting the next year to be a growth year,” Katz said. “It looks now like we’re going to have another year where it’s stuck.”