For Spin Master Corp. (TSX:TOY), a Canadian manufacturer of toys and related services for children, this year has certainly been an interesting ride for investors.
After increasing more than 20% in a single trading day following very positive earnings results (climbing a few days thereafter the announcement), shares have sold off slightly, with the company’s year-to-date increase now hovering around 36% (still, not too shabby).
The hype and hysteria around Spin Master’s primary toy line, Hatchimals is truly something to behold, and investors have begun to buy into the hype surrounding the potential for future long-term profitability growth with this company.
Having successfully developed and launched more than one line of children’s toys as well as acquiring some very iconic toy brands along the way, the company’s growth trajectory appears to be strong, with a realistic path to continued profitability growth few companies are able to tangibly realize over their lifespans.
Headwinds for the toy company, however, appear to be picking up speed, spoiling the party for hopeful investors expecting the company’s valuation multiple to continue to climb.
This past week, iconic toy retailer Toys ‘R Us filed for bankruptcy in both Canada and the U.S., resulting in a meaningful drop in company’s near-term stock price. The extent to which this bankruptcy will affect Spin Master remains to be seen, and it appears the company will have some work to do in bolstering its sales and distributions channels to get as many of its toys sold in a short amount of time.
Invest wisely, my friends.
