Toronto-based Spin Master Corp. sent shockwaves across the Toronto Stock Exchange today as its stock shot up by 16 per cent and more to close at 22.42 Canadian dollars after strong earnings, one of the bright spots in a lacklustre market session.
The blockbuster rally followed closely on the heels of the company’s earnings report for the third quarter of 2025, which, despite the headwinds facing traditional toy sales, showcased a strong shift to digital entertainment that made an impressive case to investors and analysts. Buyers flooded in with holiday and then beyond the holiday season, promise and trading volume broke out over the average level of 1.6 million shares.
The values painted a picture of resilience in a difficult environment. Spin Master reported quarterly revenue of about 830 million Canadian dollars, down 17% year-over-year, due to a 20% decline in gross product sales of toys (toys, not games) of about 650 million dollars.
The physical toy segment gives the most dramatic example of a destocking event: despite several retailers reporting only a slight one per cent decline in POS data, aggressive destocking occurred on the segment due to increased inventory deductions as a result of pressure from retailers to restock faster, combined with the impact of U.S. tariffs on Chinese imports.
However, the company’s real story was to do with its strategic diversification. The landscaping evolution has counteracted headwinds to some extent, with digital games and entertainment revenues more than making up for the decline, delivering a narrower than feared 20% niche decline at the core of the gross product sales.
Profitability remained strong, with adjusted EBITDA margin growing to 26.6% highlighting tight controls of costs and efficiencies of operations. The operating income accounted for 151 million dollars and net income 106.8 million dollars, with diluted earnings per share of 1.03 dollars.
These numbers nicely defy consensus expectations, which had pencilled in sharper declines in view of broader consumer spending weakness in North America. Management attributed its ability to protect margins to the “Creative Centres” model, and in particular, the digital organisation.
Brand names such as PAW Patrol, Rubik’s Cube and Melissa & Doug remained strong leaders, but new titles in mobile and console gaming attracted record engagement, and there was a 35% growth of users quarter over quarter.
Spin Master CEO Max Rahn was optimistic during the earnings call, mentioning that the digital explosion puts the company not only to ride through tariffs but to prosper in a mixed reality play environment. “We’re evolving from a toy company to a global entertainment company with upcoming entertainment franchises,” announced Sepmeyer, which are connected to popular franchises and enhanced interaction through artificial intelligence.
A small improvement in the expected EBITDA margins was also observed for the full year, reflecting strong confidence that we will have a strong ramp-up of our business from Black Friday through Christmas.
Analysts jumped on board right away, a handful lifting their price targets to 28 dollars or above, citing the fact that the company holds a 15% market share in North American toys and that there’s untapped potential in the company’s digital offerings worldwide.
Despite a slight +0.11% advance to 30,179 points for the broad-based Composite Index, the wave of buying that swept through the consumer discretionary sector of the TSX was strong enough to lift proxies like Mattel as well as entertainment names.
Increasing oil gave energy-related companies a healthy headwind, but Spin Master’s acquisition grabbed headlines and increased its market cap by more than 300 million dollars in a single session. Confident shortlist candidates: Spinmaster: Despite macroeconomic turbulence and the Bank of Canada’s recent reduction to its economic growth forecast, the company has a fortress balance sheet. Spinmaster has 400 million dollars in cash and virtually no debt.
This isn’t Spin Master’s first time dealing with adversity. The company’s supply chain has been tangled, inflationary pressures have occurred, play schemes have changed, but somehow they seem leaner each time. Its acquisition spree, which includes recent digital studios investments, has shifted revenue streams away from toys from single digits two years ago to 25% non-toy.
Relief in tariff friction of approximately 50 million dollars this quarter is being passed either by nearshoring to Mexico and Vietnam, and fully absorbed by Q1 2026. Technology tie-ins in holiday play: Superheroes and Friends – PAW Patrol and Rubik’s SAAS – Rubik’s app in augmented reality and PAW Patrol in the work of cinema are just two of the ways technology is set to capture the imagination of Gen Alpha.
For Canadian investors, Spin Master is a great example of the TSX’s consumer resiliency. With a wobbly economy, its lifestyle assurances of its 11.3% return on forward earnings and increase in dividends to 0.12 dollars per share for the quarter make it a dividend aristocrat-in-waiting.
Pension funds and retail investors poured in today, and short interest gapped 40% after the earnings. Management flatly rejected rumours of a buyout for $650M despite private equity fund interest in acquiring some of the industry’s promising playmakers with eye-catching valuations, a fact that will offer Wall Street a potential takeover premium going forward.
As Halloween launches the seasonal extravaganza, spin master’s digital toy designer may change holiday gift-giving. With the e-commerce penetration reaching 40% of sales and collaborators with representatives of streaming platforms increasing, the way to 2026 appears paved with gold.
Today’s parabolic is not a flash in the pan; instead, it is a confirmation of bold reconfiguration that will push shares to peak out at 25 dollars through the year’s close. In a marketplace that is hungry for the narratives of growth, Spin Master has presented the ultimate Halloween treat – a profit in the face of chaos, and investors are indulging.