Hasbro, Mattel Just Proved That Sympathy Plays Don't Always Pay Off

Besides the Q4 beat, there is another factor that has contributed nearly 14 percent rally (based $94.00)— that being, the Street was leaning the wrong way into the report.

Investor Reactions

In other words, investors had been aggressively selling the issue ahead of the report as opposed to being aggressive buyers. The reason being, the Street thought the company was going to follow the lead of Mattel, Inc. MAT, which disappointed the Street with its Q4 report.

After the close on January 25, the company missed Wall Street estimates for EPS by $0.19 and came up shy on revenues by $126 million. As a result, the issue swooned from its previous day closing price of $31.56 to $25.99 and is still trading at that level.

Sympathy Moves

In a "sympathy move" — when traders or investors seize on related issues in a sector after some or good bad news — the Street took the ax to Hasbro as well. On that same day, it fell from its previous day's close of $86.76 to $81.51.

Interestingly, some traders avoided the potential "bad omen," as the issue bottomed in that same session at $80.22 and has spent no time below that day's closing price of $81.51. Although it had put in a potential long-term bottom, it was only slightly more that $1.00 above that price going into the report as it ended Friday's session at $82.63.

Post-Print

Following the huge beat, the issue opened well above its former all-time-high of $88.53 from April 2016 and continued in that direction. In the first minute of the session, it reached $96.34, before some profit-takers came into the issue which has taken it no lower than ($93.30). At this time, it is attempting to remain in the $94.00 handle.

One factor that may have dictated the opposing moves is that Hasbro benefited from was the strong holiday demand for Walt Disney Co DIS's Disney princesses and "Frozen" themed dolls. Along these lines, Q1 numbers will reflect sales derived from the latest Disney hit "Star Wars: Rouge One," which debuted in December.