Bank of America has reiterated Hasbro’s ‘underperform’ rating and suggests its stock could drop by 29%, arguing that it “continues to destroy customer goodwill by trying to over-monetise its brands”.
Last time Bank of America criticised Hasbro and Wizards of the Coast, in November, it focused primarily on Magic: The Gathering. But in an updated statement, it’s now pointed to the recent DnD OGL incident, Wizards’ attempt to introduce a licence that would require all creators to report earnings and some to pay royalties, as evidence of over-monetisation.
“We remain especially cautious on Hasbro’s Wizards segment given its over-monetization of Magic,” BofA told Business Insider on Tuesday. “Wizards recently tried a similar tactic with D&D – proposing changes to its licensing agreement which led to substantial pushback from the community, including calls to boycott the D&D movie.”
It’s interesting that BofA singles out Hasbro’s Wizards segment as an area for particular caution, since it’s the only segment of the company that made gains during a poor Q4 2022, and the Magic: The Gathering brand made more than $1 billion last year for the first time.
Many of Bank of America’s criticisms seem to relate to Magic’s secondary market. Equity research analyst Jason Haas thinks falling card prices, caused by excessive reprinting, means Magic is losing its “scarcity value”, collections are being liquidated, and Magic collectors are losing money. “As a result, we expect they’ll order less product in future releases,” he said, in his November report.
Responding to these claims in December, Wizards president Cynthia Williams argued, “There is no evidence that Magic is overprinted, and the sentiment of ‘Magic needs to cut print runs to support prices’ is a misunderstanding of our business and our customers”.