tally altered its risk profile, turning a bleak forecast into a minor blip. For Mattel, the same macroeconomic warning was enough to send its shares sharply lower. “Mattel is in the early stages of an investment similar to Hasbro’s investment in gaming over seven years ago,” DA Davidson analyst Keegan Cox said. Investors in Mattel, the maker of the iconic Barbie dolls and Hot Wheels toys, were worried about the company’s exposure to the weakening toy market and the growing risk of having to hold down inventory amid uncertain retailer orders. “December gross billings in the US ended up growing less than expected,” Mattel said, implying that there were fewer fresh orders from retailers during the key holiday shopping period.  Two paths, one fallout Mattel derives most of its revenue from selling toys, including Hot Wheels cars and trucks, toddler playsets under its Fisher-Price brand, dolls, and action figures licensed from companies such as Pixar and Warner Bros. Discovery. Consumers, however, are purchasing fewer classic toys and spending more on tabletop and digital games associated with popular online shows and films. Mattel signalled on Tuesday that it was entering the digital gaming market, announcing its plan to acquire the remaining 50 per cent of a joint venture with China’s NetEase. But the initiatives are still in the early stages and are also pressuring margins. In contrast, Hasbro reported an 86 per cent jump in its Wizards of the Coast and Digital Gaming segment revenue in the December quarter, while its operating margin grew to 45 per cent from about 24 per cent a year earlier. Magic: The Gathering, the company’s flagship trading‑card franchize, posted a 141 per cent surge in revenue. “While investors have seen how traditional toy IP can successfully land itself into digital gaming, and the margin opportunity of that upside, Mattel’s sizable investment in digital gaming in 2026 delays the earnings upside,” UBS analysts wrote in a note.  Mattel on Tuesday said it aims to invest about $110 million in 2026, primarily directed towards digital games, and about $40 million in performance-based marketing. Lingering inventory piling up In the reported quarter, Mattel experienced margin pressure due to additional discounting to clear inventory buildups following a “shift in shipping patterns from direct import to domestic fulfilment,” it said on a call with analysts on Tuesday. The company stated that retailers had changed how they placed orders due to tariff uncertainty and shifting consumer preferences.  Now, instead of forecasting demand months in advance and managing long lead times, retailers such as Walmart are buying based on current demand, thereby forcing companies such as Mattel to hold inventory in their warehouses. Analysts said that the inventory clearout, which is expected to bleed into the current quarter for Mattel, will add to the company’s woes. Hasbro commands a higher forward price-to-earnings multiple of 18.95, compared with Mattel’s 12.14. Mattel’s shares were trading at about $15.23 on Wednesday. Reporting by Aishwarya Venugopal and Angela Christy in Bengaluru. Editing by Sayantani Ghosh and Shinjini Ganguli. All courtesy of Reuters.