The Market Imposes a $2.75 Billion Fine on Mattel
Mattel stock price, March-August 2007
Mattel vs. S&P500, March-August 2007:
The discipline of the market can be strict, swift and severe. Mattel's stock price has dropped by almost 24% since late May (see chart above), largely due to two separate recalls of Chinese-made toys, which represents a $2.75 billion penalty for Mattel in the form of a loss of market value from about $11.45 billion in late May vs. $8.7 billion today (even accounting for the overall recent decline in stock prices (red line is S&P500), Matell (blue line) has fallen even further).
See related Forbes article here.
Bottom Line: Market competition is often the ultimate regulator. Who needs the FTC and FDA when you've got the market imposing immediate fines and discpline?