Can HAS stock get a catalyst from the nascent virtual world?
Hasbro (NASDAQ: HAS) accomplished the coveted double beat when the company reported fourth-quarter earnings on February 7. But so far the market’s reaction has been underwhelming. Investors are listening carefully to forward guidance. In 2022, Hasbro is projecting revenue growth in the low, single-digit range, that’s in-line with analysts’ expectations.
However, there was one item that seems to be troubling investors. That was the company’s revelation that the current supply chain disruptions meant it took three times longer for products in transit from China to get to retailers. And according to chief financial officer Deborah Thomas Hasbro expects more “challenges with freight costs and input costs for the better part of this year.”
In response to that challenge, the company will be increasing prices in the second quarter. That’s not good news for investors debating what to do with a stock that is a laggard to the broader market.
For answers, we think you can look to the company’s digital gaming platform. While it’s still in the early stages, it may position Hasbro to be a participant in the blossoming metaverse.
What Will the Metaverse Be Like?
I can’t open my email without receiving one or more emails about how to invest in the metaverse. However, when executives were asked about the metaverse late in 2021 many seemed to have their own definition of what the metaverse is, or will be.
Count Hasbro’s incoming chief executive officer among them. Chris Cocks had this to say about the metaverse, “The first step to be participating in the metaverse, you have to have digital games. I think the metaverse is shorthand for, hey, entertainment is digitizing and entertainment is the Game of Life.”
The Game of Life as you may be aware is one of Hasbro’s popular board games. And it’s available as a digital download. But the ability to play one of your favorite board games online, even if you can compete against others isn’t the metaverse. But, as Cocks points out, it’s a start.
Hasbro has gone even further by partnering with Roblox (NYSE:RBLX) to create Roblox-inspired NERF blasters as well as a Roblox version of the company’s Monopoly board game. If you’re planning to compete in the metaverse, Roblox would be a good company to partner with.
And then there’s the company’s partnership with The Worldwide Asset eXchange (WAX) that is allowing the company to compete in the non-fungible token (NFT) market. The Power Rangers NFT collection is available on the WAX blockchain. Each NFT is redeemable for a physical, limited edition collectible Power Rangers figure.
Should You Go Long With HAS Stock?
Hasbro is reporting strong revenue. In fact, the last two quarters have been record quarters. However, the pace of that revenue growth slowed dramatically from the third quarter to the fourth quarter. And the company’s forward guidance suggests that 2022 may bring more of the same. For their part, analysts give HAS stock about a 15% upside from its current price.
I personally would be saddened by a world that didn’t have families playing board games and interacting in real life (or IRL for those that speak in text). But I also would be hesitant to start a business in 2022 that did not have a strong digital and/or metaverse presence.
I think Hasbro is developing that. But it’s not completely here yet. However, I give the company high marks for thinking about it. There aren’t many consumer discretionary companies that have a clear idea of what the metaverse will look like for their brands. By taking these initial steps, Hasbro seems to be skating to where the puck is going. That’s an investable position to take.
And in the meantime, the company does offer a solid dividend that it has increased in each of the last 18 years.