Hasbro Dilutes the Value of Magic: the Gathering, Bank of America Says

An anonymous reader quotes a report from Insider: Hasbro continues to dilute the brand value of its popular Magic: The Gathering card game, according to a Tuesday note from Bank of America, which said that the company faces a steep decline in its share price if it continues to "destroy customer goodwill." The bank reiterated its "Underperform" rating for Hasbro and its $42 price target, which represents potential downside of 29% from current levels. According to BofA, Hasbro continues to over-monetize the brands within its Wizards segment, which includes Magic: The Gathering and Dungeons & Dragons. "Within its Wizards segment, Hasbro continues to destroy customer goodwill by trying to over-monetize its brands," Bank of America said. The bank said that while it preannounced negative earnings, the stock is still not de-risked "given a host of outstanding issues." Mainly, Hasbro is attempting to squeeze out as much profit as possible from its Wizards products in the short-term without any thought as to the long-term durability of its brands. And the over monetization is irking customers, according to BofA. "We remain especially cautious on Hasbro's Wizards segment given its over-monetization of Magic. 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," BofA explained. [...] "We've spoken with several players, collectors, distributors and local games stores and have become aware of growing frustration. The primary concern is that Hasbro has been overproducing Magic cards which has propped up Hasbro's recent [earnings] results but is destroying the long-term value of the brand," Bank of America analyst Jason Haas wrote in November. The oversupply of Magic cards means "card prices are falling, game stores are losing money, collectors are liquidating, and large retailers are cutting orders," Bank of America explained. The bank names "weak fan engagement with Hasbro's brands" and "fading appetite for Magic releases" as key downside risks for the stock.

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