An owner's plan for Mattel (NASDAQ: MAT), in the ValueAct idiom — find the jewel, name the distractions, pull the levers. Quantified: sell everything, keep Hot Wheels, rename the company.
A $5.4B-EV company generating $745M of adjusted EBITDA less capex, trading at ~7.3x EV/(EBITDA−capex), with its largest and only growing power brand buried under three declining ones and a studio ambition. The stock has round-tripped to 2018 levels while management guides to a 2027 hockey stick.
Bar length ∝ FY25 worldwide gross billings, 2025 10-K. Hot Wheels is now 45% larger than Barbie and 28.8% of total company billings — its eighth consecutive record year [UBS conf, Mar 13 '25: "seventh record year on its way to its eighth"].
Every earnings call and investor conference from May 2024 through August 2026, and what each said about the current fiscal year's guidance — versus what actually printed. The pattern: a cost-led beat in 2024, a three-step walk-down and miss in 2025 (affirmed ten weeks before the miss), and a reset-plus-hockey-stick in 2026.
| # | Date | Event | FY | What they said | Action |
|---|---|---|---|---|---|
| 1 | May 21 '24 | J.P. Morgan TMT conf. | 2024 | "Reiterating our guidance… comparable top line and double-digit EPS growth." | AFFIRM |
| 2 | Jun 5 '24 | Stifel Cross Sector conf. | 2024 | "We do expect to achieve our full year guidance." | AFFIRM |
| 3 | Jul 23 '24 | Q2 2024 earnings | 2024 | Reiterated: sales ~flat cc · adj GM 48.5–49% · adj EBITDA $975M–1,025M · adj EPS $1.35–1.45 · FCF ~$500M. | AFFIRM |
| 4 | Sep 9 '24 | Goldman Communacopia | 2024 | "Our expectations haven't changed. We can reiterate our guidance today." | AFFIRM |
| 5 | Oct 23 '24 | Q3 2024 earnings | 2024 | Sales trimmed to "comparable to slightly down"; adj GM raised to ~50%; EBITDA/EPS held. | TRIM TOP LINE |
| 6 | Dec 4 '24 | Morgan Stanley consumer conf. | 2024 | "Strong Black Friday… we do expect to grow in the fourth quarter and achieve our guidance." | AFFIRM |
| 7 | Feb 4 '25 | Q4 2024 earnings | 2024→25 | FY24 actual: adj EPS $1.62 vs. $1.35–1.45 guided (+16% over midpoint); GM 50.9% vs. 48.5–49%; EBITDA $1,058M above range; FCF $598M vs. ~$500M. Sales −0.5% cc vs. "flat." Then guided FY25: sales +2–3% cc, adj EPS +2–6% (≈$1.66–1.72), FCF ~$600M. | FY24 BEAT |
| 8 | Mar 13 '25 | UBS consumer conf. | 2025 | "We definitely have the confidence around our 2% to 3% constant currency guidance… it is our intent to protect our gross margins from tariffs." | AFFIRM |
| 9 | May 5 '25 | Q1 2025 earnings | 2025 | Guidance paused — 145% China tariffs, ~$270M gross cost exposure; "hard to predict consumer spending." $600M buyback target kept. (Also the CFO's final call.) | PAUSE |
| 10 | Jul 23 '25 | Q2 2025 earnings | 2025 | Resumed, lower: sales +1–3% cc (was 2–3%) · adj GM ~50% (was ~51%) · adj OI $700–750M · adj EPS $1.54–1.66 (was ≈1.66–1.72) · FCF ~$500M (was $600M). | RESUME LOWER |
| 11 | Sep 3 '25 | Goldman retailing conf. | 2025 | "That's why I feel confident about reiterating our guidance today." | AFFIRM |
| 12 | Dec 3 '25 | Morgan Stanley consumer conf. | 2025 | "Our guidance remains unchanged… POS both year-to-date and quarter-to-date is positive." Ten weeks later they missed every resumed number. | AFFIRM |
| 13 | Feb 10 '26 | Q4 2025 earnings | 2025→26 | FY25 actual: adj EPS $1.41 vs. $1.54–1.66 resumed guide (−8% below the floor; −16% vs. the original midpoint); adj GM 48.9% vs. ~50%; adj OI $620M vs. $700–750M; FCF $411M vs. ~$500M. December promo blowout "to manage our own inventory." Guided FY26: sales +3–6% cc (incl. Mattel163 M&A), adj OI $550–600M after $110M of "strategic investments," adj EPS $1.18–1.30 — far below Street. Promised 2027: mid-to-high-SD revenue, double-digit OI growth. | FY25 MISS |
| 14 | Mar 12 '26 | UBS consumer conf. | 2026 | FY26 affirmed; 2027 pre-sold: "mid- to high single-digit revenue growth and strong double-digit growth in operating income… Barbie is positioned to grow in 2027." | AFFIRM |
| 15 | Apr 29 '26 | Q1 2026 earnings | 2026 | Q1: sales +1% cc, adj GM −450bps to 45.1%, adj EPS −$0.20 loss. Guidance "unchanged" but recast to exclude acquired-intangible amortization → adj OI $580–630M, adj EPS $1.27–1.39. | RECAST |
| 16 | Aug 4 '26 | Q2 2026 earnings | 2026 | Reiterated: +3–6% cc · adj GM ~50% (back half must run >50%) · adj OI $580–630M · adj EPS $1.27–1.39. "We do not expect a rebuild of the heavy promotional activities that occurred at the end of 2025." | AFFIRM |
| Fiscal year | First full-year adj EPS guide | Final guide before print | Actual | Verdict |
|---|---|---|---|---|
| FY2024 | $1.35–1.45 (double-digit growth) | $1.35–1.45 (held all year) | $1.62 | BEAT +16% cost-led; sales landed at the soft end |
| FY2025 | ≈$1.66–1.72 (+2–6% on $1.62) | $1.54–1.66 (post-pause), affirmed Dec 3 '25 | $1.41 | MISS −16% vs. original midpoint; below even the lowered floor |
| FY2026 | $1.18–1.30 (Feb '26) | $1.27–1.39 (recast basis, reiterated Aug 4 '26) | open | RESET −25% below where FY25 was originally pitched; needs >50% GM in H2 |
Note: the Q3 2025 earnings call (late Oct '25) falls just outside the 16-most-recent-transcript window; the Dec 3 '25 conference confirms guidance was still being affirmed in that gap. All quotes from Koyfin transcripts, transcript_downloads/MAT/.
Four divestitures, an estimated ~$7.2B gross / ~$5.9B after tax and friction, against a $4.33B market cap. Assumptions stated; flex them yourself — the conclusion survives.
| Asset for sale | FY25 gross billings | Est. net sales¹ | Basis for value | Bear | Base | Bull |
|---|---|---|---|---|---|---|
| Barbie (+ film/TV rights) | $1,204M | ~$1,060M | Iconic global IP with a proven $1.4B-box-office film franchise; declining toy line. 2.4–3.5x net sales to a media/consumer strategic. | $2.6B | $3.0B | $3.7B |
| Fisher-Price + Power Wheels | $622M | ~$550M | Declining, birth-rate exposed, post line-exits. 0.9–1.35x net sales to PE or a juvenile-products consolidator. | $0.5B | $0.6B | $0.75B |
| American Girl | n/d (in Dolls) | n/d | Mattel's own goodwill test: fair value = 1.4x carrying value on $207.6M goodwill. Direct-to-consumer + content buyer. | $0.25B | $0.3B | $0.4B |
| Everything else — UNO, MEGA, Polly Pocket, Monster High, Thomas, MOTU, licensed action figures, Mattel163 digital games | $2,503M | ~$2,200M | UNO alone is a jewel-grade card franchise; blended 1.2–1.8x net sales, haircut for licenses (Disney, Jurassic, Minecraft, WWE) that may not transfer. | $2.6B | $3.3B | $4.0B |
| Gross proceeds | $5.95B | $7.2B | $8.85B | |||
| After ~18% tax & friction | $4.9B | $5.9B | $7.3B | |||
¹ Gross billings × 0.88 — the company-wide FY25 conversion of gross billings to net sales ($5,347.6M / $6,079.0M; sales adjustments are booked by customer, not brand). Matchbox and other non-Hot-Wheels vehicles (~$245M billings) stay with RemainCo at zero ascribed value — conservatism.
A single-brand, capital-light global franchise: ~$1.54B net sales (from $1,749.7M billings × 0.88), growing ~11%, #1 share, an adult-collector flywheel, and a licensing/content tail. Die-cast at massive scale carries the best unit economics in the portfolio; freed of American Girl retail, Fisher-Price infrastructure, and studio overhead, a focused P&L supports a premium EBITDA margin versus the conglomerate's 17.3%. Valued on EBITDA − capex, with capex at 3.5% of sales (~$54M — die-cast is tooling-heavy; company-wide runs 3.4%).
| Hot Wheels, Inc. standalone | Bear | Base | Bull |
|---|---|---|---|
| Adj EBITDA margin on ~$1,539M net sales | 22% | 25% | 28% |
| Adj EBITDA − capex (~$54M) | $285M | $331M | $377M |
| EV / (EBITDA − capex) — toy peers low-teens, owned-IP pure-plays high-teens | 12.0x | 15.0x | 17.5x |
| Enterprise value | $3.4B | $5.0B | $6.6B |
Sanity check: base case implies Hot Wheels contributes ~44% of today's total company EBITDA−capex ($331M of $745M) from 29% of billings — consistent with management calling vehicles margin-accretive across the last 16 transcripts. The multiple is applied to enterprise value; equity value comes from the bridge below.
| Scenario | HW EV | Net proceeds | Equity value | Per share | vs. $15.14 |
|---|---|---|---|---|---|
| Bear — cheap sales, 22% margin, 12x EBITDA−capex | $3.4B | $4.9B | $6.8B | $23.65 | +56% |
| Base — 25% margin, 15x EBITDA−capex | $5.0B | $5.9B | $9.4B | $32.83 | +117% |
| Bull — strategic bidding war, 28% margin, 17.5x | $6.6B | $7.3B | $12.4B | $43.46 | +187% |
The ~$4.8B of post-debt excess capital in the base case is 111% of the current market cap — returned via tender and special dividend, it converts the SOTP from a slide into cash. Management is already a forced buyer of its own argument: $1.2B repurchased over three years (18% of the float, per the CFO at UBS in March), a fresh $1.5B authorization, and the explicit statement that "our current share price doesn't reflect the intrinsic value of the company." Agreed. This plan is the proof.
Renaming Mattel to Hot Wheels, Inc. isn't cosmetic — it is the capital-allocation constitution. A company named for its jewel cannot quietly re-divert the jewel's cash flow into declining dolls, preschool infrastructure, or studio dreams. The tape already voted: Hot Wheels passed Barbie in billings in 2024 and is now 45% larger. Mattel the name carries the museum; Hot Wheels the name carries the future.
"Growth in vehicles, driven by Hot Wheels — it's coming off its seventh record year on its way to its eighth. That business is doing fantastic."— Mattel management, UBS Global Consumer & Retail Conference, Mar 13 '25
Ticker: HWLS. The 80-year-old seal goes to the buyer of Barbie, where the museum belongs.
Hot Wheels' standalone EBITDA margin. Everything else is arithmetic. Even at the conglomerate's 17.3% margin — surely too low for the crown jewel — HW EBITDA−capex is ~$212M, the base SOTP is ~$26.60/share, still +76%. The plan does not need the bull case to work.