Why Toy Stocks Like Hasbro, Mattel, and Funko Were Plunging Today

Shares of Hasbro (NASDAQ: HAS), Mattel (NASDAQ: MAT), and Funko (NASDAQ: FNKO) were getting crushed today as investors reacted to President Donald Trump's announcement of reciprocal tariffs last night.

Consumer discretionary stocks are getting hit especially hard since many of these products are imported from abroad, and consumers don't need to buy them. Toys are an especially discretionary category so it wasn't surprising to see shares of Hasbro, Mattel, and Funko all falling sharply today.

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The S&P 500 finished Thursday down 4.9%, while Hasbro had lost 12.3%, Mattel was down 16.6%, and Funko had given up 18%.

Image source: Getty Images.

Are toy stocks in trouble?

Of all the discretionary categories, toys may be the most vulnerable here, especially if the economy weakens and consumers tighten their spending even further.

After all, toys are typically bought for children, who don't make a lot of purchasing decisions, and there are also ample substitutes for new toys, including used toys, games, or other forms of entertainment.

The supply chains of all three of these companies seem vulnerable to the new round of tariffs, and the toy industry was already struggling prior to the trade war due to weak consumer spending and an extended hangover following the pandemic peak.

According to Hasbro's annual report, the company makes its products principally in the U.S. and the Far East, including China, Vietnam, India, and Japan. Most of the company's products are made from basic raw materials like plastic, paper, and cardboard so moving production around or bringing it back to the U.S. may be easier than it is for some products, like cars. Hasbro also has a segment devoted to online games, which should be protected from tariffs.

At Mattel, meanwhile, its primary manufacturing facilities are located in China, Indonesia, Malaysia, Mexico, and Thailand. The company sources raw materials from a wide range of suppliers, meaning raw materials shouldn't be a concern, though it is likely to have to absorb or pass along the cost of the tariffs, at least in the near term. Mattel has struggled for the last few years. Revenue fell by 1% in 2024 even as it shored up margins, so the timing of the new tariffs may be challenging for the business.

Funko, best known as the maker of the POP! figurines, is much smaller than Hasbro and Mattel so it's the most vulnerable to an economic shock from tariffs or a possible recession. Like its peers, Funko makes most of its products outside the U.S., primarily in Vietnam and China, though it also manufactures in the U.S., Mexico, and Cambodia.

The company also makes a majority of its sales from the U.S., and the popularity of its toys have been driven by fads at times, making Funko a risky stock to own even in good times.

What's next for the toy sector

The health of the overall economy may be of a greater concern for these companies than the impact of tariffs. These companies do tend to sell low-priced goods so it will be easier for consumers to absorb a higher price than it would be on an expensive durable good.

However, the toy sector was already struggling before the tariff announcement, and the weakening consumer sentiment puts the industry in a tough spot. Hasbro and Mattel have pursued brand licensing arrangements to leverage brands like Barbie into video entertainment, but the category leaders remain mostly dependent on toy sales.

While the tariffs remain subject to negotiations, it seems likely that prices will go up in the category, which could test a consumer that's already struggling. Overall, it's not surprising that a sector that was already weak and vulnerable was hit hard by today's news.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Hasbro. The Motley Fool has a disclosure policy.