Strong Forecast Triggers Selloff Amid Valuation Concerns
Pop Mart shares slid more than 6% on Wednesday, despite the company projecting at least a 350% profit surge and 200% revenue jump for the first half of 2025. The Beijing-based toymaker, known for its Labubu character and blind-box sales model, reported exceptional growth but faced investor skepticism over sustained momentum. Analysts believe the drop was driven by profit-taking and lingering concerns about valuation and regulatory risks.
In its Hong Kong Stock Exchange filing, Pop Mart attributed growth to global brand expansion, broader product offerings, and improved cost control. The company highlighted overseas market success and economies of scale as key profit drivers. Still, analysts like Jeff Zhang of Morningstar suggested growth may have peaked in the first half, prompting a shift in sentiment despite the stellar numbers.
Massive Growth and Brand Momentum
Pop Mart’s profit in H1 2024 had already jumped nearly 93%, while revenue soared 62%. In Q1 2025 alone, revenue was up 170% year-over-year, driven by a staggering 480% rise in international markets and 100% domestic growth. The company’s intellectual property lineup, led by characters like Labubu, Molly, and Crybaby, has driven its massive popularity, especially among Gen Z and millennial collectors.
Despite recent regulatory scrutiny over blind-box marketing to children, Pop Mart’s core demographic remains adults. While state media criticism briefly hit sentiment in June, investors have since focused on long-term brand strength and consumer appeal. A human-sized Labubu figure sold for $150,000 in Beijing, signaling the intensity of collector interest.
Valuation Debate and Market Caution
The stock had nearly tripled year-to-date before the latest pullback, trading at HK$247. But some analysts argue that high expectations may have already been priced in. Zhang maintains the stock remains overvalued given uncertain IP longevity and slower expected growth in the second half.
Nomura analysts, however, saw the guidance as slightly exceeding already bullish market expectations and raised their price target to HK$330. They reaffirmed Pop Mart as their top pick in the Chinese consumer sector, citing strong overseas performance and effective operational scaling.
Pop Mart as a Cultural Phenomenon
Experts point out that Pop Mart’s appeal transcends traditional toys, offering consumers emotional rewards in an uncertain economic climate. Ivy Yang of Wavelet Strategy described the brand’s value as rooted in personalization and identity, contrasting it with more generic IP merchandise from companies like Sanrio or Miniso.
With China’s broader economy still under pressure and consumer spending subdued, Pop Mart’s rise stands out. Whether the company can maintain its pace through the rest of 2025 remains to be seen, but its current trajectory and cultural impact suggest it will remain a major player in both domestic and global toy markets.
