Three years ago, Barbie was the biggest name in Hollywood.
The blockbuster film starring Margot Robbie and Ryan Gosling turned a toy-aisle staple into a cultural moment. For a while, it looked like Mattel had cracked the code on turning toys into entertainment.
However, that glow has slowly faded.
Sales of Barbie and other toys have declined, and the company has struggled to turn its business around, CNBC reported.
The stock is down 20% in 2026 and trades 66% below all-time highs.
Now, one of Mattel’s biggest investors is saying out loud what Wall Street has been whispering. And the timing could not be more awkward for the company’s brand-new boss.
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Mattel’s turnaround plan asked investors to wait
On Sept. 15, then-CEO Ynon Kreiz and CFO Paul Ruh took the stage at the Goldman Sachs Global Consumer and Retail Conference.
The executives explained that the toy industry was growing at a double-digit pace, and Mattel expected to hit its full-year guidance.
Related: Goldman Sachs turns bearish on Barbie maker
But there was a catch. Mattel had chosen to spend heavily in 2026, and the payoff was still a year away.
Analysts tracking Mattel stock forecast free cash flow to decline by 52% year over year to $197 million in 2026. However, FCF is projected to improve to $535 million in 2028.
“As a whole, we do see 2026 as an investment year where we proactively took some of our earnings and put [them] back in the business to drive growth, but we will see a return on these investments in 2027 and beyond,” Kreiz said.
Basically, Mattel asked shareholders to be patient, and some of them may be running out of patience.
Soon after, Mattel named Roger Lynch as its new CEO and chairman. He took over from Kreiz, who had led the company for eight years.
Ariel Investments urges Mattel to explore a sale
Ariel Investments, a major Mattel shareholder, sent a letter to the company’s board arguing that Mattel should consider a sale to the right buyer, CNBC reported.
“By our estimates, a strategic buyer would pay a significant premium to your current share price,” Ariel Chairman John Rogers wrote, according to CNBC.
Rogers said Mattel would appeal to entertainment companies and private equity firms. He laid out a range of options, from a “divestiture of significant assets, a merger and/or an outright sale of the company.”
Ariel is among Mattel’s largest shareholders, based on ownership data from TIKR.com.
It owns 15.41 million shares, or about 5.4% of Mattel’s outstanding stock.
The stake is worth $245.6 million.
Ariel added 1.85 million shares in Q2, an increase of 13.6%.
It is now the fourth-largest shareholder, behind EdgePoint Investment, PRIMECAP Management, and BlackRock.
Notably, Ariel was buying more Mattel stock, while BlackRock and two Vanguard funds were trimming their positions. Mattel also makes up nearly 2% of Ariel’s equity portfolio.
“We appreciate Ariel Investments’ longstanding investment in Mattel and their continued engagement,” a Mattel spokesperson told CNBC.
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“Our Board of Directors and management team are committed to acting in the best interests of all shareholders and will consider the views expressed in Ariel Investments’ letter, as well as the views of Mattel’s other shareholders,” the spokesperson added.
A few days back, brand licensing firm Authentic Brands expressed takeover interest in Mattel, CNBC reported. The Wall Street Journal also said Authentic privately discussed an offer that could value Mattel at more than $20 per share, or about $6 billion.
At the time of writing, MAT stock is priced at $15.93, valuing the company at a market cap of $4.4 billion.
A person familiar with the talks told CNBC that discussions are still in the preliminary stage.
The source said the interest makes sense because Authentic wants entertainment properties, especially ones aimed at kids.
Mattel is struggling with sluggish sales, despite owning the iconic Barbie brand.ZU_09 / Getty Images
What a Mattel sale could mean for shareholders
Lynch now walks into a tricky first test.
Management’s plan says the real rewards arrive in 2027, which Kreiz called a “high growth year” for the company. A buyer, meanwhile, could offer shareholders a premium right now.
If Mattel stock is priced at 13x forward FCF, which is in line with the three-year average, it could surge over 50% within the next 18 months.
Out of the 10 analysts covering Mattel stock, six recommend “Buy,” two recommend “Hold,” and two recommend “Sell.” The average MAT stock price target is $18, which is 14% above the current price.
Mattel’s own track record gives both sides ammunition.
The company has bought back about $1.5 billion in stock since 2023, Ruh said at the Goldman Sachs conference. That equals about 23% of its float.
Supporters of the turnaround could point to that cash power, and Ariel could argue it proves the business is worth more to someone else.
Either way, the Barbie maker’s next chapter may not be written by management alone.
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