Magic: The Gathering owner Hasbro is ‘killing its golden goose’ analyst

A Bank of America analyst says Hasbro is “destroying the long-term value” of Magic: The GatheringOverprinting of cards. The dire warning was accompanied by a double downgrade of Hasbro stock — from “buy” to “underperform” — as its valuation fell more than 5% before trading began on Monday.

“Hasbro is overproducing Magic cards which has propped up recent results,” wrote research analyst Jason Haas. “Card prices are falling, game stores are losing money, collectors are liquidating and large retailers are cutting orders.”

Hasbro was recently proud of the recent performance of the Wizards of the Coast division, which includes Magic as well as the Dungeons & Dragons tabletop role-playing game. Haas points out that Magic alone accounts for some 15% of Hasbro’s annual revenue and some 35% of its annual earnings. The sales of collectible cards nearly doubled during the pandemic. Hasbro encouraged that continued growth with new products throughout 2021-2022. But Haas believes that the end of that growth curve is looming on the horizon, in part because “Magic has grown primarily by extracting more revenue from each player rather than by growing its player base.”

Image by BofA Global Research

The effect is visible on the shelves of individual retailers.

“The increased supply has crashed secondary market prices which has caused distributors, collectors and local game stores to lose money on Magic,” Haas wrote. “As a result, we expect they’ll order less product in future releases.”

Haas has also called out Magic 30th Anniversary Set as especially inhumane. The $999 bundles contain four cards packs, normally selling for $5 each. But these special collector’s packs include reprints of highly sought after cards such as the Black Lotus. While technically unplayable in some of the game’s most competitive formats, their reintroduction still breaks a vow made to fans decades ago.

“Not only is the price excessively high,” Haas wrote, “but the set also includes Reserved List cards which Hasbro had promised to never reprint. This has created panic among collectors and we’re seeing collections being liquidated now that the scarcity value of Magic is in question.”

Haas says that Hasbro should reduce its production runs to ensure more sales of older products.

“Local game stores already appear to be selling Magic’s latest expansion set, The Brothers’ War, at a loss on TCGplayer,” Haas wrote. “Brothers’ War draft booster boxes are available now on TCGplayer for $107 and set booster boxes for $112, below a break-even price of $115 and $120 (per our math).”

Haas indicated that such overproduction may eventually result in a loss to dedicated fans.

“While Magic has a dedicated sticky fanbase, we’re concerned that continued overproduction of cards and declining secondary market values could push players and collectors into other trading card games such as Pokémon, Yu-Gi-Oh! and Flesh and blood,” Haas concluded.