A Bank of America analyst says Hasbro is “destroying the long-term value” of Magic: Gather by printing stacks of cards. The dire warning comes with the downgrade of Hasbro stock twice – from “buy” to “underperform” – on its valuation more than 5% off before trading begins on Monday.
“Hasbro is overproducing Magic writes research analyst Jason Haas. “Card prices are falling, game stores are losing money, collectors are liquidating and major retailers are cutting orders.”
Hasbro recently touted the performance of its Wizards of the Coast business unit, which includes Magic as Dungeons & Dragons board role-playing game. Haas noted that Magic alone accounts for about 15% of Hasbro’s annual revenue and about 35% of Hasbro’s annual income. Collectible card game sales have nearly doubled during the pandemic, and Hasbro has fueled that growth going forward with additional new releases throughout 2021 and 2022. But Haas believes that growth the end of that growth curve is approaching, in part because “Magic has grown mainly by extracting more revenue from each player rather than growing its player base.”
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Image: BofA . Global Research
For individual retailers, the effect can be seen on store shelves.
“The increased supply has driven down secondary market prices, leaving distributors, collectors and local game stores at a loss. Magic,” Haas wrote. “As a result, we expect them to order fewer products in future releases.”
Haas also called Celebrating 30 years of magic considered particularly serious. These $999 bundles include only four card packs, typically costing around $5 each. But these special collections include reprints of much sought after cards like Black lotus. While technically unplayable in some of the game’s most competitive formats, their reintroduction still breaks vows with fans from decades ago.
Haas writes: “Not only is the price outrageous, but this set includes the exclusive List cards that Hasbro has promised never to reprint. This has created panic among collectors and we are seeing collections being liquidated as the scarce value of Magic is in doubt.”
Haas concluded that Hasbro needed to cut back on its print run going forward to allow more of its older products to sell for more.
“Local game stores seem to have sold Magiclatest expansion set of, Brotherly War, lost to TCGplayer,” Haas wrote. “brother war draft booster box is currently available on TCGplayer for $107 and order booster box for $112, well below breakeven prices of $115 and $120 (according to our math).”
Haas says this type of overproduction can eventually lead to the loss of devoted fans.
“While Magic has a loyal and engaged fan base, we are concerned that continued overproduction of cards and a drop in secondary market value could push players and collectors into the games. play other trading cards, such as Pokémon, Yu-Gi-Oh! and flesh and blood,” concluded Haas.
