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Published December 5, 2024
After dismal holiday sales, toy manufacturer Hasbro left investors holding a lump of coal. When investors quickly dumped their shares, Hasbro’s stock plummeted 11% overnight. Some of those angry shareholders have now filed a class action lawsuit against Hasbro hoping to recover their lost investment.
During the early stages of the Covid pandemic, Hasbro loaded up on inventory due to the increased demand for at-home activities. Unfortunately, the company over-bought and was left with warehouses full of unwanted games and toys. Hasbro executives assured investors that these extra toys were actually in anticipation for the 2022 holiday season, but in reality, demand for Hasbro’s products had diminished.
Investors learned the truth in October 2023: the toy giant failed to sell the excess inventory, which remained in warehouses. Executives announced a one-time, $55 million expenditure to aggressively market and apply heavy discounts to the merchandise.
Stunned investors quickly sold off their Hasbro shares, cause the stock’s price to freefall. Now, some of those shareholders are signing up for the class action lawsuit.