Mattel wants to be known as an entertainment powerhouse. Wall Street still sees it as a toymaker.

The maker of Barbie dolls and Hot Wheels cars has spent years trying to transform into a toy and entertainment company, partnering with movie studios to bring its brands to the big screen while also expanding into digital games and live experiences.

The playbook is similar to how Marvel Entertainment evolved from a comic-book publisher to Hollywood mainstay under Disney, where a combination of toys, films, games and theme-park attractions continuously feed one another.

As it stands, Mattel remains firmly stuck in the toy aisle, with the majority of its revenue coming from toy sales. The company’s movie releases have been met with mixed success, while increased investments to bolster its entertainment push have pressured profit and weighed on shares.

Shares of Mattel were up 1.1%, at $15.03, after hours Tuesday, and closed at $14.86, far below the stock’s peak from more than a decade ago and near the trough levels it reached in 2017. Analysts said the valuation is strikingly low, considering the transformation of the business over the past several years and the potential equity of brands such as Barbie and Hot Wheels.

Investors are growing impatient. Southeastern Asset Management, which has a more than 4% stake in Mattel, called for a sale of the toy company in May, arguing its brands would be better off in the hands of a private-equity firm, competitor or large media company.

Other shareholders have since said that Mattel should examine alternatives to boost its share price.

Mattel said that Wall Street is failing to credit its progress: “We are focused on execution,” Chief Executive Ynon Kreiz said in an interview. “Ultimately, we expect that the market will respond.”

Entertainment at scale

Kreiz, a former television studio executive, inherited a battered business when he stepped into Mattel’s top role in 2018, making him the fourth CEO in as many years. He initiated a two-pronged turnaround, aiming to first stabilize the core toy business and then leverage the company’s vast portfolio of intellectual property to pivot toward media.

Analysts and investors broadly agree that Kreiz’s initial, operations-focused turnaround was successful. The second task has proven to be more difficult.

Mattel’s first attempt under Kreiz to adapt one of its brands for Hollywood came in 2023 with “Barbie,” which became Warner Bros.’ highest-grossing movie ever and boosted Mattel’s top line through direct film participation, doll sales and licensed merchandise. The momentum has been hard to sustain, though, with sales of Barbie dolls down 12% and 11% in 2024 and 2025, respectively, putting the brand’s annual sales below what they were before the movie came out.

The second attempt came earlier this summer with “Masters of the Universe,” which was met with mixed reviews and failed to recoup its production budget at the box office. Mattel said the movie was a success, more than tripling the brand’s toy sales, and continues to reach new audiences on streaming.

The company’s next film, “Matchbox: The Movie,” is slated for a direct-to-streaming release this fall. Beyond that, Mattel has more than 15 films currently in development, including a film based on its Hot Wheels franchise and an animated Barbie movie. None of the in-development films have release dates attached to them.

Ideally, the company will, in the future, release one to two movies each year, Kreiz said. “We’re still early in the execution of the entertainment strategy, and things do take time because of the nature of some of these projects,” he said.

In all instances, Mattel hasn’t informed Wall Street of how production and marketing costs are split, or what box-office benchmarks and toy sales constitute a success, analysts said. Mattel has also been slow to grow its entertainment business, which has yet to meaningfully change the structure of the company.

“Mattel has been saying for a while that entertainment at scale can be very profitable,” Roth analyst Eric Handler said. “The problem is that they haven’t been able to scale that part of the business sufficiently.”

To sell, or not to sell

Analysts and investors agree on one point: Mattel’s brands are being dramatically undervalued by public markets.

“The gap between what Mattel’s portfolio of brand equity is worth vs. what the market currently ascribes to it as a toy manufacturer remains, in our view, one of the most compelling valuation disconnects in the consumer and entertainment space today,” UBS analysts said.

Shareholders have some ideas on how to close that gap. Southeastern is pushing for a sale. It argued that going private would provide insulation from volatile quarterly earnings releases, or that Mattel could be plugged into another company’s established distribution flywheel, avoiding the costly effort of building one from scratch.

Ariel Investments, another investor with a roughly 5.4% stake in Mattel, said it has confidence in Kreiz to consider all strategic alternatives and do what is right for shareholders.

“Business as usual hasn’t worked,” said John Rogers, the firm’s co-chief executive. “Considering all the different alternatives is something that’s appropriate for him and the board to do.”

EdgePoint Investment Group, Mattel’s largest shareholder, expressed confidence in the company’s strategy. The firm also said that it “wouldn’t be surprised if there were a number of interested strategic and financial parties that see a lot of value in that IP.”

Mattel declined to comment on speculative scenarios regarding a sale.

“We own unique assets in a world where everybody is looking for big IP,” Kreiz said. “And we believe that we have what it takes to drive the business forward.”

Write to Connor Hart at Connor.Hart@wsj.com

Mattel wants to be known as an entertainment powerhouse. Wall Street still sees it as a toymaker.

The maker of Barbie dolls and Hot Wheels cars has spent years trying to transform into a toy and entertainment company, partnering with movie studios to bring its brands to the big screen while also expanding into digital games and live experiences.

The playbook is similar to how Marvel Entertainment evolved from a comic-book publisher to Hollywood mainstay under Disney, where a combination of toys, films, games and theme-park attractions continuously feed one another.

As it stands, Mattel remains firmly stuck in the toy aisle, with the majority of its revenue coming from toy sales. The company’s movie releases have been met with mixed success, while increased investments to bolster its entertainment push have pressured profit and weighed on shares.

Shares of Mattel were up 1.1%, at $15.03, after hours Tuesday, and closed at $14.86, far below the stock’s peak from more than a decade ago and near the trough levels it reached in 2017. Analysts said the valuation is strikingly low, considering the transformation of the business over the past several years and the potential equity of brands such as Barbie and Hot Wheels.

Investors are growing impatient. Southeastern Asset Management, which has a more than 4% stake in Mattel, called for a sale of the toy company in May, arguing its brands would be better off in the hands of a private-equity firm, competitor or large media company.

Other shareholders have since said that Mattel should examine alternatives to boost its share price.

Mattel said that Wall Street is failing to credit its progress: “We are focused on execution,” Chief Executive Ynon Kreiz said in an interview. “Ultimately, we expect that the market will respond.”

Entertainment at scale

Kreiz, a former television studio executive, inherited a battered business when he stepped into Mattel’s top role in 2018, making him the fourth CEO in as many years. He initiated a two-pronged turnaround, aiming to first stabilize the core toy business and then leverage the company’s vast portfolio of intellectual property to pivot toward media.

Analysts and investors broadly agree that Kreiz’s initial, operations-focused turnaround was successful. The second task has proven to be more difficult.

Mattel’s first attempt under Kreiz to adapt one of its brands for Hollywood came in 2023 with “Barbie,” which became Warner Bros.’ highest-grossing movie ever and boosted Mattel’s top line through direct film participation, doll sales and licensed merchandise. The momentum has been hard to sustain, though, with sales of Barbie dolls down 12% and 11% in 2024 and 2025, respectively, putting the brand’s annual sales below what they were before the movie came out.

The second attempt came earlier this summer with “Masters of the Universe,” which was met with mixed reviews and failed to recoup its production budget at the box office. Mattel said the movie was a success, more than tripling the brand’s toy sales, and continues to reach new audiences on streaming.

The company’s next film, “Matchbox: The Movie,” is slated for a direct-to-streaming release this fall. Beyond that, Mattel has more than 15 films currently in development, including a film based on its Hot Wheels franchise and an animated Barbie movie. None of the in-development films have release dates attached to them.

Ideally, the company will, in the future, release one to two movies each year, Kreiz said. “We’re still early in the execution of the entertainment strategy, and things do take time because of the nature of some of these projects,” he said.

In all instances, Mattel hasn’t informed Wall Street of how production and marketing costs are split, or what box-office benchmarks and toy sales constitute a success, analysts said. Mattel has also been slow to grow its entertainment business, which has yet to meaningfully change the structure of the company.

“Mattel has been saying for a while that entertainment at scale can be very profitable,” Roth analyst Eric Handler said. “The problem is that they haven’t been able to scale that part of the business sufficiently.”

To sell, or not to sell

Analysts and investors agree on one point: Mattel’s brands are being dramatically undervalued by public markets.

“The gap between what Mattel’s portfolio of brand equity is worth vs. what the market currently ascribes to it as a toy manufacturer remains, in our view, one of the most compelling valuation disconnects in the consumer and entertainment space today,” UBS analysts said.

Shareholders have some ideas on how to close that gap. Southeastern is pushing for a sale. It argued that going private would provide insulation from volatile quarterly earnings releases, or that Mattel could be plugged into another company’s established distribution flywheel, avoiding the costly effort of building one from scratch.

Ariel Investments, another investor with a roughly 5.4% stake in Mattel, said it has confidence in Kreiz to consider all strategic alternatives and do what is right for shareholders.

“Business as usual hasn’t worked,” said John Rogers, the firm’s co-chief executive. “Considering all the different alternatives is something that’s appropriate for him and the board to do.”

EdgePoint Investment Group, Mattel’s largest shareholder, expressed confidence in the company’s strategy. The firm also said that it “wouldn’t be surprised if there were a number of interested strategic and financial parties that see a lot of value in that IP.”

Mattel declined to comment on speculative scenarios regarding a sale.

“We own unique assets in a world where everybody is looking for big IP,” Kreiz said. “And we believe that we have what it takes to drive the business forward.”

Write to Connor Hart at Connor.Hart@wsj.com