Shares of toy maker Jakks Pacific Inc. continued their plunge Wednesday, falling 31%, a day after the Malibu-based company was sued over a bribery scheme by the licensor of a popular toy and video game.
Jakks dropped $5.85 to close at $12.96 on Nasdaq.
The company's shares have lost about half of their value since Tuesday after World Wrestling Entertainment Inc. filed a federal lawsuit in New York, accusing Jakks, its executives, and licensing agents of a bribery scheme aimed at shutting down competition for WWE's lucrative toy and video game licenses.
WWE is seeking to void these licenses, which expire in 2009, and is seeking monetary damages from Jakks.
Jakks executives have denied any wrongdoing.
Video game titles such as "WWE SmackDown," "Wrestlemania X8" and "Raw 2" produced by a joint venture of Jakks and THQ Inc. have contributed $41.6 million to Jakks' bottom line since the venture was launched in 1999, according to company filings.
Jakks' "relationship with WWE has been unbelievably profitable," said portfolio manager Michael Lehman of Third Avenue Fund in New York.
Whitaker Securities analyst Garrett Edson downgraded Jakks to "sell" from "buy," adding that there was likely to be plenty of uncertainty surrounding the stock.
The analyst said Jakks' toy and video game license deal with WWE was expected to contribute about $31 million to $37 million this year; Jakks expects to book about $500 million in revenue this year.
Times wire services were used in compiling this report.