Mounting challenges take the fun out of Playmates Toys 

The once dominant toy maker has struggled since last year, and its downward spiral accelerated in the first half of 2025

Key Takeaways:

• Playmates Toys reported its revenue plunged nearly 60% in the first half of 2025, as the company fell into the red 
• U.S. tariffs are rubbing salt into the toy maker’s already wounded business 

By Lau Chi Hang

Teenage Mutant Ninja Turtles toys have been key warriors for Playmates Toys Ltd. (0869.HK) over the last three decades, keeping the company high in the global toy box – and profit column – for years. But even the biggest hits have their ups and downs, as Playmates is discovering. The lack of new movie tie-ins for its star product, combined with a similar dearth of new hit products, are taking their toll on the company, as revealed by a profit warning last week showing its downward spiral accelerated in the first half of this year.

According to the announcement, Playmates revenue plunged 58% in the six-month period to just HK$186 million ($23.69 million) from HK$445 million in the same period of 2024. As that happened, the toymaker slipped into the red with a loss of HK$26 million for the period, wiping out a net profit of HK$91 million a year earlier.

Sagging revenue 

This isn’t the first time that cracks have appeared in Playmates’ toybox. Signs of trouble first showed up in the second half of last year, dragging down the company’s revenue by 16% for all of 2024 to HK$930 million. The company’s annual profit was even more alarming, plummeting 41% year-on-year to HK$132 million. Things continued to worsen in the first quarter of this year, with revenue tumbling 61.5% year-on-year to just HK$85 million, as the company swung to a HK$12 million loss from a HK$65 million profit a year earlier. 

Playmates blamed the poor performance on a lack of opportunities for new toys tied to recent movie releases and other entertainment. The company’s sales previously soared on such tie-in products after the release of “Godzilla x Kong: The New Empire” in March 2024. Without a similar blockbuster tie-in this year, related sales contracted sharply. Simultaneously, the company’s core “Teenage Mutant Ninja Turtles” line of toys lacked any major entertainment releases that could be used as tie-ins, dampening demand for those products.

As its revenue sputters, Playmates is looking for its next big hit, incurring significant expenses for product development, molds and media production to support new product launches that can revive its fortunes. And outside its core toy business, realized and unrealized gains from the company’s stock investments fell 57% in the first half of this year to HK$9 million from HK$21 million in the year-ago period, further undermining its bottom line.

Playmates’ sales rely heavily on the release of related movies. For instance, the 2023 film “Teenage Mutant Ninja Turtles: Mutant Mayhem,” which grossed $180 million globally, drove over $1 billion in sales of related merchandise worldwide in a short period. Thus, the company is naturally facing tough times without the release of any related blockbusters so far this year.

Pinning hopes on Ninja Turtles

In announcing its 2024 annual results in March, Playmates flagged that 2025 would be a “year of transitional development for us, with no major entertainment events planned to support the ‘Teenage Mutant Ninja Turtles’ or ‘Godzilla x Kong’ product lines.”

With that in mind, the company attempted to reassure investors. It emphasized that Paramount Pictures and Nickelodeon Movies were producing a sequel to “Teenage Mutant Ninja Turtles: Mutant Mayhem,” which is set for release in October next year. The company said it has also been developing new products based on “Tales of The Teenage Mutant Ninja Turtles,” a TV series that began streaming in the U.S. a year ago and is now set to run a second season.

Playmates has also signed a licensing agreement to produce and sell toys based on Hasbro’s Power Rangers franchise. It is currently developing the “Mighty Morphin Power Rangers: Re-Ignition” toy line, with shipments set to begin this summer.

Imminent challenges 

While Playmates could get a boost from the new “Teenage Mutant Ninja Turtles” movie next year, the company still faces several significant long-term challenges. The first is aging IP. It’s fair to say that “Teenage Mutant Ninja Turtles” has been the company’s major revenue pillar for over 30 years, and thus has become Playmates’ tentpole.

But the franchise could be running out of steam, with limited value left to offer. When a company’s sales rely heavily on movie releases, instability naturally follows. No films can translate to no sales, and no predictable revenue for investors. Moreover, there’s no guarantee that a film release will automatically translate into big sales.

Adding to Playmates’ challenges is a shifting market. In the past, few Mainland Chinese or Hong Kong toymakers could challenge Playmates’ position. But that has changed with the rise of a new generation of Chinese peers finding big audiences both at home and abroad. That group is led by Pop Mart (9992.HK), whose collectible toys, including a wildly popular Labubu series, have made the company a global sensation without relying on movie tie-ins. While Pop Mart targets slightly older consumers, different from Playmates’ focus on children, its more diverse toy lines and growing influence could still pose a threat to Playmates if it decides to target younger consumers as well.

Playmates also faces uncertainty created by U.S. tariffs targeting Chinese products, which have significantly undermined competitiveness of the company’s exports to the U.S. It noted earlier this year that its shipments to the U.S. were disrupted starting in April due to major new tariffs imposed on Chinese goods from that month as trade tensions escalated. 

Playmates’ stock currently looks quite cheap at a price-to-earnings (P/E) ratio of just 5.2 times, way below Pop Mart’s lofty 99 times. But it’s crucial to remember that if the company’s profits continue to decline, its price-to-earnings (P/E) ratio will effectively rise for the wrong reasons. And if the company loses money this year, such a metric would become meaningless. Given all that uncertainty, Playmates stock may not be the best toy for investors right now.

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