|Bid||63.80 x 800|
|Ask||63.88 x 1000|
|Day's Range||63.76 - 64.69|
|52 Week Range||38.02 - 73.35|
|Beta (3Y Monthly)||0.53|
|PE Ratio (TTM)||85.22|
|Earnings Date||Aug 5, 2019 - Aug 9, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||74.57|
Shares of meal-kit company Blue Apron Inc. rallied Tuesday, after the company said it would start adding Beyond Meat Inc.’s plant-based proteins to its menus starting in August, sparking a round of short covering.
A good rule of thumb to follow in investing is that penny stocks usually aren't good stocks. Most stocks don't IPO at prices below $10. As such, if a stock is trading below $10 or below $5, it means investors have sold the stock off to those levels, and such big selloffs aren't typically the result of good fundamentals or news.Because of this, when dealing with penny stocks, it is always important to remember that these stocks weren't birthed as penny stocks. They were birthed as regular stocks, and fell into penny stock territory due to poor fundamentals.That is especially true for the following list of 8 penny stocks that have fallen from grace. Once upon a time, each one these penny stocks was a high flyer that the market thought could be a huge success. Then, reality hit, and none of them ended up being what they were supposed to be. Investors dumped the stocks, and now, each one of these former high flyers trades in penny stock territory.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAre these huge selloffs buying opportunities? Or are they reason to stay away? It depends. For some of these fallen-from-grace penny stocks, the selloffs are overdone. For others, they aren't. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip With that in mind, let's take a closer look at these fallen-from-grace penny stocks, and see not only why they fell from grace, but whether or not they can bounce back from here. J.C. Penney (JCP)Source: Shutterstock All-Time High (Year): $80 (2007)Current Price: $1.15Why It's Dropped: Big box department store J.C. Penney (NYSE:JCP) was once an iconic stalwart of a thriving mall industry. That was back before the 2008 Financial Crisis, and before the onset of mainstream e-commerce. Then, Amazon (NASDAQ:AMZN) came along, and shopping pivoted into the digital channel. Some traditional retailers kept up with the times. J.C. Penney did not. In-store performance deteriorated, and without any help from a burgeoning digital business (because there was none), financial resources were depleted and JCP stock fell off a cliff.Can It Bounce Back: JCP stock is unlikely to bounce back, for two simple reasons. One, the consumer has moved on. Between Amazon, Walmart (NYSE:WMT), Target (NYSE:TGT), Etsy (NASDAQ:ETSY), Shopify (NYSE:SHOP) stores, and more, consumers have all the stores they need to get everything they want. J.C. Penney is no longer a necessary retail destination for consumers. Two, the company is running up huge losses against the backdrop of a debt burdened balance sheet that renders the company both unable to innovate and invest, and unable to use time to its advantage. As such, the most likely path forward for JCP stock is lower. Groupon (GRPN)All Time High: $25 (2011/12)Current Price: $3.40Why It's Dropped: Once upon a time, the idea of a centralized online coupons site sounded genius, and that's why Groupon (NASDAQ:GRPN) had a pretty hot start on Wall Street. Then, the commerce world changed, as retail behemoths like Amazon, Walmart, and Target made low prices the norm (thereby somewhat eroding the need for discounts). At the same time, Groupon's growth started to flatten out, and profitability remained a huge question mark. These growth and profitability struggles have persisted for the past several years, and as they have, GRPN stock has dropped in a big way. * 5 STARS Stocks Smashing the Market (FANG Stocks, Too) Can It Bounce Back: In the long run, GRPN stock can bounce back, mostly because the company has the ability to execute an impressive turnaround through focusing on discounts for experiences (not discounts for products), and through emphasizing local sales (so as to avoid competition with the likes of Amazon, Walmart, and Target). But this turnaround is progressing at a snail's pace. Thus, while I have faith that GRPN stock can and will bounce back from these under-$5 levels, it will take time. Pier 1 (PIR)Source: Shutterstock All Time High: $500 (2013)Current Price: $6Why It's Dropped: Home furnishings retailer Pier 1 (NYSE:PIR) was once considered one of the premiere retailing destinations in a thriving physical home-goods market that was largely exempt from the e-commerce onslaught, mostly because furniture was supposedly the type of stuff consumers wanted to touch and feel. As it turns out, though, that's not true. The e-commerce trend has penetrated into the furniture market over the past several years, and as it has, sales and customers have flowed out of Pier 1 and into platforms like Wayfair (NYSE:W). Pier 1's margins and profits have consequently contracted, and PIR stock has plummeted.Can It Bounce Back: PIR stock can and should bounce back from here, but the current trends underlying the company are so negative (huge revenue drops and big margin erosion, neither of which are slowing) that betting on a PIR stock turnaround here simply seems too risky. If those trends do start to stabilize, this stock can and will bounce back in a big way. But until then, the best place to hangout is on the sidelines. Blue Apron (APRN)Source: Shutterstock All Time High: $150 (2017)Current Price: $7.50Why It's Dropped: At the time of its IPO in 2017, Blue Apron (NASDAQ:APRN) was being heralded by some as a next-generation meal kit platform that was going to change the way consumers did their grocery shopping. But old habits are hard to break, and how consumers do their grocery shopping is one of the oldest habits in the book. As such, Blue Apron's growth trajectory since its IPO has dropped into negative territory, while profitability has remained elusive. This combination of slowing growth and rising losses has driven APRN stock substantially lower. * 3 Breakout Stocks to Buy Can It Bounce Back: APRN stock will likely keep falling for the foreseeable future. Meal kit market trends remain sluggish while competitionis only increasing. Thus, Blue Apron is potentially looking at shrinking market share in an increasingly competitive and slowing growth meal kit market. That combination implies that revenue, margin and profitability struggles will persist for the foreseeable future. As they do, APRN stock's struggles will persist, too. Rite Aid (RAD)Source: Shutterstock All Time High: $1,000 (1999)Current Price: $8.65Why It's Dropped: The story at Rite Aid (NYSE:RAD) is very similar to the story at J.C. Penney. Broadly speaking, both mall retail and pharmacy have been uprooted by secular changes in consumption and flooded with tons of competition. Much like J.C. Penney, Rite Aid has struggled to keep up with these changes, and has lost market share to competitors. The result has been persistent drops in revenue, margins, and profits, against the backdrop of a debt-heavy balance sheet. That combination has ultimately scared investors away in droves, and PIR stock has come crashing down over the past several years. * 3 Retail Stocks to Buy Now Can It Bounce Back: Also much like JCP stock, RAD stock is unlikely to bounce back in the foreseeable future. Amazon has yet to truly enter the pharmacy space, but their launching of an e-pharmacy business is inevitable at this point. When that business does launch, it will provide additional competitive headwinds for Rite Aid, the sum of which will keep revenues, margins, and profits in a secular downtrend. So long as that remains true, PIR stock will continue to creep towards $0. GameStop (GME)Source: GameStop All Time High: $60 (2007)Current Price: $4.80Why It's Dropped: Before the 2008 Financial Crisis, video games were bought in stores, and the go-to place to buy video games was GameStop (NYSE:GME). But over the past decade, video games have shifted from being bought in store, to being downloaded through the cloud. This shift has made GameStop an increasingly irrelevant retail destination for gamers. GameStop's sales, margins and profits have consequently been hit hard, and GME stock has dropped.Can It Bounce Back: At this point in time, a bounce back rally in GME stock is unlikely. The cloud gaming shift is only accelerating and gaining momentum, as multiple next-gen cloud gaming platforms are expected to launch in late 2019 and early 2020. These new platforms will make GameStop only more irrelevant than ever before. Sales, margins and profits will continue to drop. So will GME stock. GoPro (GPRO)Source: GoPro All Time High: $100 (2014)Current Price: $5.50Why It's Dropped: Shortly after its 2014 IPO, GoPro (NYSE:GPRO) stock went hyperbolic as Wall Street fell in love with this company's potential as a next-generation media giant. The idea was that GoPro's action cameras were creating a new form of media content, from which the company could create a content-rich streaming platform, like the YouTube of action sports. That never happened. Instead, it turns out that the action sports market is pretty niche, and there really isn't much potential on the content side here. As such, over the past several years, reality has sunk in that GoPro is just a camera hardware maker for a niche action sports market. As that reality has sunk in, GPRO stock has crashed. * 7 Short Squeeze Stocks With Big Upside Potential Can It Bounce Back: GPRO stock won't bounce back from here. But it also won't fall much further. Instead, GPRO stock seems fairly valued today considering its reality as a stable but limited growth and low margin hardware maker in a niche market. Further downside seems limited by the fact that the valuation is depressed and growth trends are stabilizing. Further upside seems limited by the fact that growth rates and margins will remain relatively muted for the foreseeable future. As such, GPRO stock projects to stay stuck in the mid to high single digit range for the next few quarters. Fitbit (FIT)Source: Shutterstock All Time High: $50 (2015)Current Price: $4.40Why It's Dropped: Much like GoPro, Fitbit (NYSE:FIT) was hyped up around its IPO as a next-generation hardware company with both huge hardware and software growth potential in the long run. Also much like GoPro, though, Fitbit never lived up to that hype. Instead, Fitbit's hardware growth trajectory fell flat, as competitors innovated more quickly than Fitbit and stole market share, and the software growth narrative never really materialized. This end-to-end growth narrative erosion, coupled with continued weak margin and profit trends, has caused FIT stock to plummet over the past several years.Can It Bounce Back: A rebound in FIT stock seems unlikely at this point in time. There was hope that new smartwatch products would catalyze a rebound in declining Fitbit sales. But that tailwind has already largely come and gone and didn't leave much of a lasting positive impact. At the same time, FIT stock seems fairly valued considering its reality as a niche consumer tech hardware maker. Going forward, there is upside potential on the data side of things. But that upside potential lacks clarity. All in all, then, the growth narrative here still remains more negative than positive, and that dynamic will ultimately prohibit FIT stock from staging a big turnaround.As of this writing, Luke Lango was long AMZN, WMT, TGT, and SHOP. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post 8 Penny Stocks That Have Fallen From Grace appeared first on InvestorPlace.
For luxury-goods reseller RealReal Inc (NYSE:REAL), the investment case is reasonably simple. REAL stock is valued essentially in line relative to other marketplace stocks. Therefore, its future trajectory boils down to whether the company has the best business model to succeed against the competition.Source: Shutterstock There's an argument that it does. The company's TheRealReal site, which offers authenticated luxury goods, has posted impressive growth. In its prospectus, the company cited an estimate that its potential addressable market could near $200 billion. Direct competition is somewhat limited, meaning RealReal Inc should at worst keep substantial market share.This is a business that should grow for some time. Valuation is acceptable, if hardly cheap. And so, if the company can outgrow its peers, REAL stock should outperform the market. However, reasons for both optimism and caution abound.InvestorPlace - Stock Market News, Stock Advice & Trading Tips REAL Stock ValuationUsing 2018 results, REAL stock looks reasonably valued compared to its two most obvious peers. According to the prospectus, RealReal generated $507 million in net merchandise value (NMV) and $207 million in revenue. The current enterprise value of roughly $1.8 billion, after its recent initial public offering, suggests that REAL trades at 3.6-times NMV and roughly nine-times revenue. * 7 Retail Stocks to Buy for the Second Half of 2019 Farfetch (NYSE:FTCH), another luxury marketplace, trades at a bit under four times its gross merchandise value (GMV) and a similar nine-times multiple to its top line (Fartech's GMV is equivalent to RealReal's NMV). Both companies posted revenue growth above 40% last year.Meanwhile, Etsy (NASDAQ:ETSY), trades at roughly two times its 2018 gross merchandise sales (GMS) and 13-times revenue. Etsy's platform is larger, and its growth slower (guided to 17% to 20% in 2019). As such, investors assign a lower multiple to GMS. But its established profitability and clear dominance of the craft niche, at least for now, give it a higher multiple to sales. I'd note I also questioned that valuation back in April, and ETSY stock only has pulled back modestly since then.To be sure, an investor can value REAL stock in other ways. For instance, its customer lifetime value (LTV) remains well above its customer acquisition costs (CAC). Modeling the number of customers over time, and the profitability of those acquired customers, can lead to cash flow-based fair value estimates.But from a broad perspective, the point is that REAL stock two weeks after its IPO has a reasonable valuation, at least on a peer basis. That's true even considering other platform plays in different end markets. Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) get higher valuations, but have bigger addressable markets. Running on the cheap end is eBay (NASDAQ:EBAY). However, stagnant growth explains this deflated value. The Case for RealReal IncThis is not to say that the current REAL stock price around $25 necessarily is "right." Investors can disagree about valuation. But at least on a peer basis, it's clearly in the ballpark of reasonable. And if RealReal turns out to be the best model of the group, it's likely shares will dominate their category.After all, the used luxury-goods market is huge. RealReal Inc wrote in its prospectus that it was looking at other categories; could it potentially move into an area like collectibles (whether sports or film-related)? Competition exists but seems limited. eBay rolled out an authentication offering in late 2017; however, the last time management discussed the issue on a conference call was in early 2018. It doesn't seem like that effort has gained much traction.Privately held Poshmarkmay be considering an IPO itself, and has an authentication business as well. But by all accounts, TheRealReal is much larger. And its "end to end" service makes consigning higher-end goods much easier.Meanwhile, existing sellers and customers seem to like the site. Approximately 80% of goods are sold within just 90 days; sell-through (goods sold versus goods added) was 96% in 2018. REAL gets particular value from those sellers who become buyers, which is now over half the total.This seems like a very attractive model, and one which RealReal clearly can dominate. And as we've seen with Etsy recently -- who squashed competition from no less than Amazon (NASDAQ:AMZN) -- and eBay, who outcompeted numerous auction sites last decade, marketplaces tend to become winner-take-all. REAL stock is set up to be that winner. The Risks are REALThat said, there are three broad risks here.The first involves margins. RealReal offers end-to-end service. It allows consignors to drop off goods in major markets or receive an in-home consultation. It authenticates the products. REAL employees write the ad copy and take the pictures.Essentially, RealReal employees do all the work that eBay or Etsy sellers usually perform. Obviously, the company is paid for that work: it takes a much larger commission than either platform. But it also results in a labor-intensive model. In fact, RealReal Inc has nearly as many employees as Etsy with less than one-fifth the GMV. How high margins can go remains questionable. That means RealReal may not be as profitable down the line as other platform plays.The second worry is returns, which the company receives a large amount. Customers returned 29% of REAL's GMV in 2018, including a spike during the holiday season. And that figure has increased in recent years.Certainly, it's not as if RealReal necessarily is eating those losses. The company does take on some inventory if a return comes after the seller has been paid. But it appears REAL generally can move that inventory: its accrual for losses on that front was about $11 million at the end of 2018. Still, that's over 5% of revenue, representing another potential pressure point on margins.Finally, there's the question of what growth looks like when the economy turns. Does RealReal in a recession benefit from even higher-end consumers looking for bargains? Or does it see a flood of used merchandise that arrives at the same time buyers are foregoing luxury purchases? If the latter, RealReal's business model is much more cyclical than eBay's or even Etsy's (which has lower price points). That could be a problem. Place Your Bets on REAL StockReasonable investors can see the case for REAL stock quite differently. Indeed, shares have been volatile after a post-IPO pop. And just on this site, Chris Lau took a bearish view, while Luce Emerson projected significant upside ahead. Both authors make good points.From here, REAL looks attractive, but not quite compelling. It's hard to tell what the business looks like at scale. And while REAL stock looks reasonable relative to peers, I'd also question whether those peers themselves are reasonably valued in a market at all-time highs. Personally, I'd like to see a few more good quarters or a valuation that provided a discount to rivals.Still, there's a path to upside here and an intriguing business available at a reasonable valuation. As far as growth stocks go, that's a good combination. It's also one that suggests that if RealReal can execute, REAL stock at $25 may prove to be a bigger bargain than even the best items on the site.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post RealReal Stock Comes Down to One Simple Question appeared first on InvestorPlace.
The company has announced that, starting July 30th, it will give "priority placement" in US search results and advertising to items that ship free and to sellers that guarantee free shipping on orders costing $35 or more. While it's offering a tool to help include the shipping cost in the price, the decision has outraged sellers on Etsy's forums and on social networks -- they're concerned that this effectively punishes smaller outfits that can't afford to swallow the shipping costs. Shipping costs can vary even within the US, and that could leave some buyers overpaying.
E-commerce giant Amazon.com, Inc. (NASDAQ: AMZN ) continues to expand its footprint with new sectors and opportunities, but CNBC's Jim Cramer said there are four companies in niche segments that can "win" ...
Shares of digital craft marketplace Etsy rose on Tuesday as the company said it would boost listings for products eligible for free shipping.
Online arts and crafts marketplace Etsy Inc. said Tuesday it is planning to make free shipping a core part of its shopping experience. The company said it intends to make shipping free for customers with a basket worth at least $35. Etsy Chief Executive Josh Silverman said the company hears from its customers that high shipping rates are a deterrent. The service will be available around the world with the company providing its sellers with tools and educational resources. Starting July 30, the company will give priority placement in U.S. search results to items that ship free and to shops that guarantee U.S. shoppers free shipping on orders of $35 or more. Shares were down 0.6% premarket, but have gained 34.6% in 2019, while the S&P 500 has gained 18.7%.
BROOKLYN, N.Y., July 9, 2019 /PRNewswire/ -- Etsy, Inc. (ETSY), the global two-sided marketplace for unique and creative goods, today announced plans to make free shipping a core part of the Etsy shopping experience. Etsy is providing sellers with tools and support to help them guarantee free shipping to US buyers who spend at least $35 in their shop. Josh Silverman, Etsy's Chief Executive Officer, commented, "Shoppers come to Etsy to discover over 60 million special and unique items that often cannot be found anywhere else.
Online arts and crafts marketplace Etsy will offer free shipping for customers with a basket worth at least $35.
As more and more people strike out on their own into the world of business, here are three companies helping the transition for these "solopreneurs."
Amazon.com (AMZN) has left a trail of devastated companies in its wake, unable to compete with the e-commerce giant's lower prices and seemingly infinite selection. In being all things to all people, Amazon is now everywhere, having created its own sort of self-contained ecosystem.That narrative is convincing. But Amazon.com isn't steamrolling every company that stands in its path.It took some time to fully figure out what makes Amazon click for so many consumers. Then it took some effort and money to actually do something about it. But as the dust finally settles on a largely unfettered exposition of its footprint, how and why some organizations still are standing is becoming clearer. Other outfits facing Amazon - not to mention investors - would be wise to note these survivors' nuances and common threads.Here's a rundown of eight stocks that are resisting the Amazon juggernaut. The fact that AMZN hasn't yet knocked them out suggests they're here to stay. SEE ALSO: The 19 Best Stocks to Buy for the Rest of 2019
If you're searching for online retailers with bullish charts, here's why you should start with Amazon, Etsy, eBay, Stitch Fix and Revolve.
Read the beginning of this article here. The most valuable position in Hawk Ridge Capital Management’s 13F portfolio was in frontdoor, inc. (NASDAQ:FTDR) worth $31.04 million, counting 901,855 shares, amassing 6.54% of its equity portfolio. Frontdoor is one of the biggest US providers of home service plans with a large network of pre-qualified contractors. It […]
Etsy stock rose then retreated Monday as a Wall Street analyst initiated coverage on the e-commerce company with a buy rating and price target that's about 22% above where it now trades.
A positive trade-war tweet from President Donald Trump sent stocks soaring on Tuesday, although there is some hesitation now as investors turn to the Federal Reserve meeting on Wednesday. Will it end the rally or ignite it even higher? Let's look at some top stock trades. Top Stock Trades for Tomorrow No. 1: Boeing Click to Enlarge An improving trade situation is big for Boeing (NYSE:BA), but so is the Paris Air Show. The company landed a deal with Amazon (NASDAQ:AMZN), another with Korean Air, and can look to move forward on a massive deal with Chinese airlines should the trade war take a few positive steps forward.That's being reflected in the charts, with Boeing stock jumping more than 0.9% on Tuesday.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's an important move, with BA stock over $360-range resistance for the first time in a month and over the 50-day moving average for the first time since March, when the 737 MAX incident occurred. It's also hurdling its 200-day in the process.$380 seems like a reasonable first target, with $400 as the next level beyond that. Back below $360, traders my want to stop out. Top Stock Trades for Tomorrow No. 2: Etsy Click to Enlarge Etsy (NASDAQ:ETSY) stock tried to push through $70 resistance and couldn't do it -- even on a day where tech stocks are up big.However, it's holding the 20-day and 50-day moving average confluence, which bodes well for short-term dip-buyers. Investors who take a shot here need to see uptrend support (purple line) hold if the 50-day fails as support.Others may wait for a breakout over $70, which could send Etsy stock to its March highs near $73.35, and higher should it rally above it. Is Etsy the next Amazon? Top Stock Trades for Tomorrow No. 3: Nio Click to Enlarge Nio (NYSE:NIO) stock is up big, following along with the rally in Tesla (NASDAQ:TSLA) and as Chinese stocks catch a bid. Once Nio lost $6, this thing was headed for the dumpster, but I didn't expect a fall this far.In any regard, shares are up more than 5% and were up as much as 10% on Tuesday. I want to see two things should NIO keep rallying. One, can it get back through prior downtrend support? Two, can it get through the 20-day moving average?Above these areas and Nio can get some upside traction. If they act as resistance, though, the $2.50 level is still on the table.Of all the stocks out there, Nio is not one I enjoy right now. It's in the dumpster when the market is near all-time highs. There are better picks out there than this speculative name, at least for my tastes. Top Stock Trades for Tomorrow No. 4: Broadcom Click to Enlarge Last week, Broadcom (NASDAQ:AVGO) took a beating after reporting earnings and going through the conference call. That call put a beating on the rest of the semiconductor space as well.But now? Now AVGO stock looks angry.Up 5% on Tuesday thanks to the improving trade war rhetoric -- just think what the chip space would do on news of a trade war agreement -- AVGO stock is back into $280 resistance.If $280 again acts as resistance, I want to see the 200-day again hold as support, along with uptrend support (purple line). Above $280 and I want to see AVGO run up to the 50-day. Over that mark and a move to $300 or more is possible. But remember, the company just disappointed on guidance, so there may be some hesitancy for the market to bid this one up too high.That said, it has a low valuation, plenty of free cash flow and a big dividend. If the trade war rhetoric continues to improve, AVGO likely moves higher. Top Stock Trades for Tomorrow No. 5: Allergan Click to Enlarge I do not like stocks that are locked in massive downtrends, like Allergan (NYSE:AGN). Plus, we highlighted a few healthcare charts that looked good yesterday, like Gilead Sciences (NASDAQ:GILD).Notice all of AGN's major moving averages heading lower, as well as its series of lower lows and lower highs. Downtrend resistance (blue line) is still going strong too.Should AGN hurdle downtrend resistance, look to see how it handles the 20-day. If it's not resistance, a move up to $130 is possible, although I expect it to draw in some sellers. Even if AGN can get there, the 50-day will likely be in play as potential resistance too, seeing as though it's currently at $135 and losing altitude.On the downside, watch the recent lows near $115. Below it and AGN can fall even further.I'm not saying this one is a total zombie or that it won't do well over the long term. Only that from a trading perspective, it's easier to sell stocks into resistance when they're in downtrends and buy stocks into support when they're in uptrends. Until AGN changes its tune, it's in a downtrend.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN and AVGO. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Red-Hot IPO Stocks to Buy for the Long Run * 5 Stocks to Buy for $20 or Less * 4 Dow Jones Stocks Ready to Rise Compare Brokers The post 5 Top Stock Trades for Wednesday: BA, AVGO, ETSY, NIO, AGN appeared first on InvestorPlace.
Among the IBD 50 stocks to watch, Etsy is nearing a potential breakout amid the new confirmed stock market rally.
Mattel (NYSE:MAT) has turned down another takeover bid from MGA Entertainment. Mattel stock surged higher on the news. MGA, who owns brands such as Bratz fashion dolls, Num Noms, and Little Tikes, has now failed twice to take over Mattel.Source: Shutterstock While this rejection of MGA has offered relief to MAT stock in the short term, turning down the deal leaves Mattel in the same beleaguered state it's been struggling in for decades.Mattel owns some of the most venerable brands in the toy business. This includes American Girl, Barbie, Fisher-Price, and Hot Wheels. Recently, it had also signed a licensing agreement with Sanrio (OTCMKTS:SNROF) to create toys, dolls, games, and other items based on the Hello Kitty brand. The toymaker has also renewed a separate licensing agreement with Warner Bros. to produce similar items for DC.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Conflicting "Best Interests"MGA CEO Isaac Larian made an overture to Mattel's CEO Ynon Kreiz in a letter dated May 21st. Mattel's chief legal officer, Bob Normile responded on June 7th, saying Mattel's board decided that the proposal was "not in the best interests of Mattel and its shareholders." * 5 Tech Stocks That Are Far Too Risky Right Now The deal would have forced out Mattel's entire board, possibly indicating the "best interests" the company protected. However, since MGA is a private company, analysts have only so much ability to evaluate the merits of the deal.However, we do know that Mattel stock has struggled over the past few decades. At its current price, it trades at levels it first saw in 1992! The rise of electronic games has reduced the demand for the physical toys and the board games that drove its business for decades. Its most direct peer, Hasbro (NYSE:HAS), has faced similar struggles. Competition Continues to IncreaseMoreover, the emergence of e-commerce giants such as Amazon (NASDAQ:AMZN) has devalued the advantage in shelf space these companies once held. This problem became worse with the closure of Toys "R" Us last year.I do not think the demand for physical toys will go away. Also, a backlash against electronic everything could even spark a revival in physical toys. However, individual creators could utilize a site such as Etsy (NASDAQ:ETSY) to compete against corporate toymakers. So it is not clear that such an occurrence would help Mattel stock. Financials for Mattel Stock Remain PoorMAT's financials continue to reflect this struggle. In its most recent earnings report, the company beat estimates but still lost 44 cents per share in the prior quarter. It also exceeded forecasts on revenue. Still, the $689.2 million in brought in during the quarter was a 2.9% reduction year-over-year. Thanks to cost-cutting, analysts forecast a profit next year. However, that will leave its forward P/E ratio at over 130. Moreover, costs can only fall so much, so staying consistently profitable could prove difficult.For now, Mattel's board rebuffs the takeover attempt, and Mattel stock benefits from a relief rally. But investors need to ask what kind of future the company has in the current business environment? With falling demand and increasing sources of competition, this company will do well just to keep itself in business. Such conditions do not leave much of a path forward for holders of MAT stock. Final Thoughts on Mattel StockTurning down the merger means Mattel will continue to face more competition amid falling revenues. In fairness, this reflects more on the state of the industry than on Mattel itself. Moreover, with MGA's financials not publicly available, assessing whether the merger would have profited holders of Mattel stock remains difficult. * 7 Stocks to Buy for the Coming Recession However, we know that Mattel stock faces an uncertain path forward. Having struggled for more than a quarter century, management offering more of the same leaves investors with no reason to buy MAT. Until this industry consolidates or produces the toys and games today's children want, investors should play in a different sandbox.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for the Coming Recession * 10 Smart Dividend Stocks for the Rest of the Year * 5 Tech Stocks That Are Far Too Risky Right Now Compare Brokers The post MAT's Rejection of Merger Offer Not a Reason to Toy With Mattel Stock appeared first on InvestorPlace.