Why the Stock Price of the Company Behind Play-Doh and Transformers Toys Soared

Hasbro (HAS) shares skyrocketed nearly 12% on Wednesday as the toymaker posted better-than-expected results on shrinking inventory and rising demand for digital games.

Hasbro reported first-quarter earnings per share of $0.61, more than double estimates. Revenue tumbled 24% to $757.3 million, but still beat forecasts.

The company noted it slashed its inventory by 53%, including a 57% drop in Consumer Products Segment inventory.

Sales at the Wizards of the Coast and Digital Gaming Segment rose 7% to $316 million, boosted by revenue from “Baldur's Gate 3” and “Monopoly Go!.” Tabletop revenue added 5%, driven by growth of “Magic: The Gathering” and the “Universes Beyond” Fallout Commander set.

Consumer Products Segment sales declined 21% to $413 million, partially because of the inventory reduction.

Sales at the Entertainment Segment plunged 85% to $21 million following the sale of its eOne Film and TV property. Excluding that impact, sales in the segment rose 65%.

Hasbro has been taking steps to improve its financial position as it deals with a difficult consumer market, and CFO Gina Goetter said the company “made solid progress in our turnaround efforts in the first quarter."

The company said it is maintaining its 2024 full-year guidance. Hasbro sees revenue at the Consumer Products Segment down 7% to 12%, with 4 points of that decline attributable to businesses shifting to an out-license model. Wizards of the Coast Segment revenue is projected to fall between 3% and 5% for the year.

Shares of Hasbro jumped 11.9% to $65.03, their highest closing level since last September. The stock has gained nearly 30% since the start of the year.