Magic: The Gathering is one of the company's top franchises and it has a stock price that has fallen more than 30%.
Bank of America lowered its price target and issued a double downgrade on the stock.
BofA believes that the over printing of Magic cards is killing its golden goose.
We have become aware of growing frustration after speaking with players, distributors, and local games stores. The long-term value of the brand is being destroyed by the overproduction of Magic cards which has propped up the company's recent earnings.
Card prices are falling, game stores are losing money, and large retailers are cutting orders as a result of the oversupply of Magic cards.
It's a precarious position for Hasbro to be in as it struggles to find the right balance between maximizing profits from its Magic franchise without diminishing the brand and its long-term value.
A further degradation of the franchise could have a material impact on the company's earnings results and ultimately its stock price.
The franchise boomed as Magic sales nearly doubled and card prices on the secondary market went up. To keep up with growth, the company had more frequent card set releases.
BofA said that players can't keep up.
A typical set pack is $5, but the Magic 30th anniversary set includes four booster packs for $999. The price is excessive and the set includes Reserved List cards which were promised to never be re-released. Now that the scarcity value of Magic is in question, collections are being destroyed.
The age-old principle of supply vs. demand is at the center of the Magic: The Gathering fiasco. Spending the balance in the name of short-term profits is having an impact on the company. The stock of the company is down by a significant amount.