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QS Research · Michael Burry's Scion Capital analyst template · 2006

JAKKS PACIFIC INC (JAKK)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: PASS

Conviction low · base case -4% · downside -23% · upside +16%

Using section 13's normalized EBITDA base (FY2020-FY2025 average $47.7M vs TTM $33.8M), a 5x-8x EV/EBITDA range plus $44.0M cash and 11.52M shares gives equity of $24.6-$37.0 per share; the midpoint is ~$30.8, about 4% below the $32.04 price. That leaves downside to $24.6 (-23%) and upside to $37.0 (+16%), so risk/reward is skewed negative and neither the long nor short rule is met. The market already recognizes the recovery: the stock is +88.5% over one year and near its 52-week high, while the company lacks a durable moat and has two customers over half of sales. I would pass at this price.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    JAKKS designs and markets toys, consumer products, and costumes, manufacturing through third parties in China and selling mainly to mass retailers and e-commerce. It reports two segments: Toys/Consumer Products and Costumes (previously Halloween in FY2020). Net sales rose from $515.9M in FY2020 to $796.2M in FY2022, then fell to $570.7M in FY2025, while international sales grew from 18.4% to 27.0% of net sales over the same period. Its two largest FY2025 customers are Target (26.6%) and Walmart (26.1%).

  2. ✓ 2. Competitive advantage

    The sources do not establish any durable competitive advantage. JAKKS faces intense competition from larger, better-resourced Mattel and Hasbro, and substantially all sales rely on licensed brands, with high customer concentration at Target and Walmart. Revenue and operating income have declined sharply from FY2022 to FY2025, with FY2025 operating income of only $14.2M; no source points to a structural moat.

  3. ✓ 3. 10-Q takeaways

    Q3 2026 sales grew strongly versus Q3 2025, with both segments up and operating margin improving. 9M 2026 results include a one-time import tariff refund in other income, so operating income is the cleaner measure. Cash declined year-to-date but operating cash flow turned positive, and no open-market buybacks were disclosed. No numeric guidance was given, and risk factors were unchanged from the 2025 10-K.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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