Lawsuit Alleges Hasbro Misled Investors About Magic: The Gathering Card Production
A shareholder lawsuit filed in a Rhode Island federal court is taking aim at Hasbro executives, accusing them of misleading investors about the viability and growth of Magic: The Gathering, the company’s flagship brand. This legal action comes just weeks ahead of Hasbro’s earnings call on February 10 and focuses less on the controversial Universes Beyond or Secret Lairs expansions and more on how Hasbro presented Magic’s growth to Wall Street, particularly regarding concerns over card overprinting.
The lawsuit, submitted on January 21 as a verified shareholder derivative complaint, names Hasbro CEO Chris Cocks, former Wizards of the Coast president Cynthia Williams, and several current and former board members. The plaintiffs allege breaches of fiduciary duty, violations of securities laws, unjust enrichment, and gross mismanagement related to Hasbro’s investor disclosures from September 2021 to October 2023. The central claim is that company leaders misrepresented the risks tied to Magic’s growth and made public statements that were “materially false and misleading” during earnings calls from 2021 to 2023. The plaintiffs, Joseph Crocono and Ultan McGlone, have held shares in the company since 2020 and 2021, respectively.
Hasbro is listed as a nominal defendant, meaning the shareholders are suing the executives on behalf of the company, with any financial damages going back to Hasbro. The goal of the lawsuit is to enforce transparency and accountability.
The complaint emphasizes Magic’s significance to Hasbro. It states that Wizards of the Coast achieved its revenue doubling goal in 2021 ahead of schedule, generating $547 million of Hasbro’s reported operating profit of $763.3 million that year. Magic alone accounted for about 15 percent of Hasbro’s total net revenue in 2021, becoming the company’s first billion-dollar brand in 2022.
The lawsuit claims that Hasbro executives downplayed concerns regarding the overprinting of Magic cards. By producing more product than the market could absorb, the suit argues that the company diminished the value of existing cards.
Executives, including Cocks and Williams, consistently portrayed Magic’s growth as a result of a “segmentation strategy,” asserting that new products were tailored for different audiences, such as collectors, competitive players, casual gamers, and digital users.
The plaintiffs contend that these reassurances were misleading. The filing indicates that internal data and inventory trends revealed Magic products were being printed at a rate faster than consumers could buy them, creating risks that were not adequately disclosed to investors. The lawsuit also highlights earnings calls and SEC filings where executives attributed rising inventory levels to timing issues with upcoming releases rather than an outright surplus.
Additionally, the complaint alleges that these statements enabled Hasbro to repurchase approximately 1.4 million shares for $125 million between April and July 2022 at inflated prices, resulting in an estimated overpayment of $55.9 million.
The filing points to two significant events: In November 2022, a Bank of America analyst report warned that an oversupply of Magic cards was “destroying the long-term value of the brand,” leading to a roughly 10 percent drop in Hasbro’s stock. Then, in October 2023, Hasbro spent $50 million to manage and market inventory as an “obsolescence cost,” according to COO Gina Goetter, which seemingly triggered another sharp decline in stock price. The lawsuit argues that the risks associated with these disclosures should have been communicated sooner.
The lawsuit establishes the period from September 2021 to October 2023 as the “relevant period” in question, which predates some of Magic’s most explosive growth, particularly linked to Universes Beyond crossover sets. A notable example mentioned by Chris Cocks in an earnings call last year highlighted that the Lord of the Rings set released in June 2023 took six months to generate $200 million in revenue, while the Final Fantasy UB set, releasing in June 2025, earned $200 million in just one day. Given the lawsuit’s focus on how Magic: The Gathering’s growth has been publicly framed by Hasbro executives, Universes Beyond has become a key part of the discussion.
This lawsuit arrives at a challenging time for Hasbro, as the company prepares for its earnings call on February 10, where executives are expected to address Magic’s growth, inventory management, and long-term strategy. While the case is still in its early stages and Hasbro has not yet publicly responded, it places pressure on the company and its executives to reconsider how they communicate during earnings calls.
The lawsuit underscores the importance of the language used by executives to describe Magic’s growth, highlighting that it has real implications, especially for a brand that has only grown more significant and profitable for Hasbro in recent years.
