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- Hasbro stock surged 12% on Thursday after the company's first-quarter earnings impressed investors.
- The gaming company said its Magic: The Gathering card franchise is still firing on all cylinders.
- One Wall Street analyst has been concerned about gamer fatigue as the company continues to roll out new card sets.
Hasbro stock surged as much as 12% on Thursday after the company reported first-quarter revenue that surpassed analyst estimates.
Revenu fell 14% from a year ago to $1 billion, but that beat analysts' estimates by about $117 million. Meanwhile, its adjusted earnings per share of $0.01 missed estimates by $0.10.
But investors were encouraged by the toy company's strong growth in its Magic: The Gathering franchise, helping settle ongoing fears from one Wall Street analyst that its customer base was suffering from wallet fatigue after Hasbro launched a number of new card sets over the past two years.
"I'd say Hasbro is in the midst of a turnaround and we're showing healthy indications that the turnaround is taking hold in the first quarter," Hasbro CEO Chris Cocks said, adding that Magic: The Gathering saw its revenue jump 16% in the quarter.
Much of the continued strength in Magic: The Gathering is being driven by content-related mashups of the game with other popular media properties, like Warhammer.
And another upcoming crossover that Cocks expects to drive continued growth in the franchise is its mashup with Lord of the Rings.
"Our first one [media crossover] was with a game called Warhammer and we're already on our fourth reprint for that, and then we have a huge one coming up in Q2 with Lord of the Rings, [and] that's already setting records for preorders," he said.
The strength in Magic: The Gathering is challenging the idea that its core customer base is growing tired of trying to keep up with all of the new releases of card sets.
"Within its Wizards segment, Hasbro continues to destroy customer goodwill by trying to over-monetize its brands," Bank of America analyst Jason Haas said in a February note.
Late last year, Haas said in a note that after talking to several players, collectors, and local game stores, "the primary concern is that Hasbro has been overproducing Magic cards which has propped up Hasbro's recent [earnings] results but is destroying the long-term value of the brand."
Insider also spoke with a comic store owner earlier this year and found similar sentiment.
"There's a lot of wallet fatigue," Brooklyn-based Action City Comics owner Eric LaGaccia told Insider. "In order to be competitive, you want the latest cards, and the cards you just spent a lot of money on are now obsolete."
But for now, that wallet fatigue among a certain group of Hasbro's core customers isn't enough to slow down what has become one of its top-selling brands.