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Mattel Plan for NFT Auction Draws Praise From J.P. Morgan Analyst

Mattel's planned move into non-fungible tokens shows the toymaker is more nimble than ever, J.P. Morgan says.

Mattel's  (MAT) - Get Report move into nonfungible tokens, or NFTs, earned the toymaker praise from a JPMorgan analyst but little immediate interest from stock investors.

Shares of the El Segundo, Calif., company, which owns Barbie, Hot Wheels, and other brands, at last check were down 3.7% at $19.17.

In a research note, analyst Tami Zakaria cited a New York Times story that said Mattel would offer three pieces of digital art in the form of NFTs for auction on its Mattel Creations website. 

The move is part of its Hot Wheels NFT Garage Series.

The works will feature classic cars from its archive: Twin Mill, Boneshaker, and Deora II, she said. The auction will run for a week and the winner will be allowed to pay in the cryptocurrency Ethereum.

"We view today’s announcement as further testament to how Mattel has evolved under Chief Executive Ynon Kreiz’s leadership, where the 75+ year company is more nimble than ever," Zakaria said.

The analyst said Mattel was now one of the first major toy companies to enter the NFT space. It acted even before much smaller competitor Funko  (FNKO) - Get Report, which is scheduled to launch this month after earlier this year it acquired TokenWave

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“We will keep an eye on the auction to gauge financial impact, but our conversations with industry insiders indicate NFTs have the potential to be a highly margin-accretive business with about 80%+ [gross-margin] rate,” said Zakaria, who has an overweight rating on the stock.

The analyst also noted that Mattel is expected to open its adventure park in North America late next year. It will feature location-based experiences involving such brands as Barbie and Hot Wheels. 

Mattel's first family entertainment center in Europe is slated to next spring.

The family entertainment center in Germany was slated to open in 2020 but got delayed by the COVID-19 pandemic, she said.

Mattel shares surged to the highest levels in more than three years in April following record first-quarter-sales growth.

Joe Exotic of the hit Netflix series Tiger King unveiled the launch of his first NFTs from federal prison in Fort Worth, Texas.

This comes after Carole Baskin, an animal-rights activist whom Exotic attempted to have killed, announced her new cryptocurrency earlier in the year.