Hasbro “continues to ruin customer reputation” and stock could drop 29% as it hurts Magic: The Gathering’s value, Bank of America says.

  • Hasbro shares have 29% downside potential as they continue to devalue the Magic: The Gathering brand.
  • This is reported by Bank of America, which on Tuesday affirmed its Worse than Yield rating on the stock.
  • “In its Wizards segment, Hasbro continues to destroy customer reputation by trying to over-monetize its brands.”

Hasbro continues to dilute the brand value of its popular card game Magic: The Gathering, according to a report from Bank of America released Tuesday, saying the company faces a sharp drop in its stock price if it continues to “destroy customer reputation.”

The bank reaffirmed its Hasbro “Unsatisfactory” rating and $42 target price, representing a potential 29% decline from current levels. BofA warned in November that Hasbro was “killing its golden goose” by over-monetizing Magic: The Gathering.

Hasbro continues to over-monetize brands in its Wizards segment, which includes Magic: The Gathering and Dungeons & Dragons, according to BofA.

“In its Wizards segment, Hasbro continues to destroy customer reputation by attempting to over-monetize its brands,” Bank of America said in a statement. The bank said that while it had previously posted negative earnings, the stock was still risk-averse “given the many unresolved issues.”

Basically, Hasbro is trying to squeeze as much profit as possible out of their Wizards products in the short term, with little regard for the longevity of their brands. According to BofA, excessive monetization annoys customers.

“We remain particularly wary of Hasbro’s Wizards segment given its excessive Magic monetization. Wizards recently tried a similar tactic with D&D by proposing changes to their licensing agreement, which prompted significant outcry from the community, including calls to boycott the D&D movie,” BofA said. explained.

Hasbro wanted to change its 20-year Dungeons & Dragons open game license to boost revenue ahead of the upcoming release of a movie based on the game.

The specific changes would require independent publishers and content creators to report financial data directly to Hasbro and pay significant fees if they generated a certain revenue threshold.

Hasbro has since abandoned the proposed changes to Dungeons & Dragons after receiving strong backlash from customers, with nearly 70,000 D&D fans signing a petition protesting the proposed license change.

The Hasbro mess reinforces BofA’s view that the toy company’s management is still willing to risk customer loyalty for short-term profits.

“We have spoken to several gamers, collectors, distributors and local game stores and we have become aware of growing frustration. The main problem is that Hasbro makes too many Magic cards, which has supported Hasbro’s recent growth. [earnings] results but destroys long-term brand value,” Bank of America analyst Jason Haas wrote in November.

The glut of Magic cards means “card prices are falling, game stores are losing money, collectors are being liquidated, and major retailers are cutting back on orders,” Bank of America explained.

The bank cites “weak fan engagement with the Hasbro brands” and “fading appetite for Magic releases” as key risks to the stock.

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