Downgraded Mattel Stock Pacing For Worst Day Since October

The toy stock is also heavily shorted

Managing Editor
Feb 26, 2018 at 10:25 AM
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Mattel, Inc. (NASDAQ:MAT) stock is down 6.7% to trade at $15.52 -- on track for its worst day since a late-October bear gap -- after Jefferies downgraded the toy manufacturer to "underperform" from "hold." The brokerage noted that challenging industry conditions and the rising cost to compete would contribute to flattened growth and stock value. But while the firm said Mattel's recovery is already priced into the stock, it boosted its price target to $13 from $12.50.

The shares have been churning in the $15-$19 region since mid-November, with their 200-day moving average containing any breakout attempts. The equity has now given back 40% year-over-year, and has underperformed the broader S&P 500 Index (SPX) by almost 13 percentage points during the past three months. 

Short sellers are likely cheering the security's struggles today. Short interest increased by nearly 10% during the last reporting period to 60.49 million shares -- and has more than doubled since August. These bearish bets now represent a hefty 18% of MAT's total available float. 

Elsewhere, short-term options traders have taken a put-skewed approach to the toy stock. For instance, MAT's Schaeffer's put/call open interest ratio (SOIR) stands at 1.66, putting it in the 93rd annual percentile. This means put open interest outweighs call open interest among contracts expiring within three months by a much wider-than-normal margin.

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