As the market seems to finally be waking back up – especially in the tech sector…
It seems like a lot of things are getting back to normal.
That said…
We’re still not completely OUT of the woods yet.
As we transition back to a bull (well, at least bull-ISH market) – there are still going to be a lot of bumps along the way.
A lot of companies are going to run into hurdles…
Especially as they come off the highs of pandemic spending.
However…
Not all bad news is ACTUALLY bad news.
Sometimes bad news can actually be GOOD news…
Or at least not as bad as it could be.
One company found this out recently…
See which company got bad news – and is HAPPY about it.
Bad news is never good…
Whenever I’m asked whether I want good news or bad news first – I always take the bad news first… it’s just easier.
I also eat the thing I like the least first – so I can savor what I like at the end – but I digress…
As the company that got some bad news this week was Lego.
Now, I know you can’t actually buy stock in Lego as it’s a privately owned company…
But the story has lesson to it for investors – so keep reading.
So…
Recently, Lego reported that profit growth dropped like a dad who stepped on one of its little plastic blocks in the middle of the night.
Last year, the demand for Lego’s brightly colored plastic bricks was so high – that the company had to take action to keep up.
To meet the demand – the world’s largest toymaker opened a whopping 155 new stores and increased production in more than half of its factories.
With the popularity of fan favorites like Star Wars and Harry Potter sets leading the surge – profits were buffeted by new creations as well…
Which accounted for almost HALF of 2022’s sales.
As a result – Lego was able to increase its market share and revenue by 17%.
However, the increased investment and higher costs had a negative impact on profits…
Resulting in a modest 4% increase in 2022 – the smallest since the start of the pandemic.
The smallest in three years.
That’s bad news, right?
Well…
Not exactly.
Lego’s results actually surpassed the company’s expectations…
Especially given the challenges posed by the pandemic in recent years.
Despite this, the company is confident that its market share will continue to grow in 2023…
This is in contrast to its competitors Mattel and Hasbro – who are predicting stagnation and declining revenue.
Lego plans to avoid their fate by refraining from raising prices and opening more stores – especially in China – where the economy is beginning to recover.
The company is optimistic about its future prospects and believes that its strategies will lead to continued success.
Here’s the issue…
While store openings can be beneficial – it’s increasingly difficult to capture children’s attention away from digital devices – which poses a threat to traditional toymakers such as Lego.
To address this challenge – Lego has adopted a digital-first approach and is investing more resources into its e-commerce platforms and digital gaming experiences.
Also – the company is expected to announce a partnership with Epic Games – the developer of the incredibly popular video game, Fortnite – to create a metaverse.
By embracing digital technologies – Lego aims to remain relevant and engaging to today’s tech-savvy children.
That’s a GREAT lesson to remember…
When the world gives you lemons – make some lemonade!
That’s what GorillaTrades always does…
As our trading strategy makes it that even when a stock looks like a lemon – our analytics show that it’s actually something worth ingesting.
If you’re tired of looking at lemons – and want to enjoy a tall cool glass of lemonade (well… when it comes to stocks)…
You should consider becoming a member of GorillaTrades today.
We see ourselves as the lemonade stand of the online stock services…
And we’d love to help you.
Regardless of whether you take us up on our offer or not…
Always know we here to help.
Until next time…
“Children mean everything to us. Children and their development. And this must pervade everything we do.” ―Kjeld Kirk Kristiansen