High-growth stocks plummet, Pop Mart adjusts "rest and recovery," has the growth ceiling been reached?

Ask AI · How can LABUBU’s breakout help Pop Mart avoid IP dependency risk?

After delivering the “strongest annual report in history,” Pop Mart has experienced three consecutive days of share-price decline, with a rare divergence between performance and market sentiment.

On March 25, Pop Mart International Group (Pop Mart, 09992.HK), a leading collectible toy company, released its full-year 2025 results. During the reporting period, the company’s total revenue first exceeded 30 billion yuan, reaching RMB 37.12 billion, a year-over-year increase of 184.7%; adjusted net profit rose to RMB 13.08 billion, up 284.5% year-over-year, with multiple key metrics setting new records.

However, this unexpectedly strong financial report did not boost the stock price. After the earnings release, Pop Mart’s share price fell by more than 30% cumulatively. To stabilize market confidence, Pop Mart issued announcements on March 26 and 27, announcing plans to repurchase shares, spending nearly HKD 900 million. In 2025, Pop Mart has cumulatively repurchased over HKD 1.2 billion worth of shares.

On one hand, core indicators such as revenue, profit, and gross margin are all improving; on the other, valuation is declining, and investors are taking profits. What exactly is the market worried about? What does the “rest period” that Pop Mart proactively proposed mean? With cross-industry expansion into small home appliances, accessories, theme parks, movies, and other new businesses, can it truly expand the boundaries of IP value? After experiencing turbulence, where is Pop Mart’s core “moat” now?

Is the 20% growth guidance too conservative?

“The reasons for strong performance but falling stock prices are quite complex. On the surface, it mainly stems from factors like the 20% performance guidance and the increased contribution ratio of LABUBU. From our observations, this company has maintained triple-digit year-over-year growth for several years. After facing a period of extremely high global popularity, they chose to actively slow down development, and they have consistently emphasized not over-consuming the IP during LABUBU’s development,” said a senior industry insider in the collectible toy sector to The Paper. “From these perspectives, it may be beneficial for long-term development, but short-term market volatility is hard to avoid.”

At Pop Mart’s earnings presentation, founder Wang Ning stated that 2025 was the fastest-growing year since the company’s listing and also a very challenging one—like a rookie racing driver suddenly being thrown into F1.

Regarding 2026, Wang Ning said: “We hope 2026 will be a year of entering the repair shop—refueling and changing tires. After rapid development, we want to take a brief pause. All companies go through cycles, and during high-speed growth, every company needs to identify problems that need solving even faster than others.”

Wang Ning’s guidance for 2026 is “to strive for no less than 20% growth, without pursuing overly aggressive revenue growth that doesn’t increase profits.”

From the outside, this guidance appears more conservative than market expectations.

The same industry insider also told The Paper directly that “what the market is trading isn’t the 2025 results but the growth expectations for 2026—after all, the stock price has already reflected high growth expectations.”

However, a person close to Pop Mart expressed a different view to The Paper, believing that based on historical operations, Pop Mart’s growth guidance has generally been relatively conservative: “In 2024, the expected growth was 30%, but the actual was 107%; in 2025, the overall expected growth was 50%, with overseas growth at 100%, but the actual results were 184% overall and 220% overseas.”

Can LABUBU support market expectations?

In 2025, Pop Mart’s IP LABUBU became a global sensation, transforming into a world-class IP. The revenue of THE MONSTERS, where LABUBU is based, reached RMB 14.16 billion, up 365.7% year-over-year, accounting for 38.1% of total revenue, compared to 23.3% in 2024.

Pop Mart’s IP LABUBU — Photo by The Paper’s Wu Yuxin

With the share of revenue from LABUBU increasing and its popularity expected to decline in 2026, some question whether Pop Mart is overly reliant on a single IP, and whether LABUBU can still support high-growth market expectations.

Industry commentator Zhang Shule told The Paper: “A single super hit can drive extraordinary performance. Once there’s no follow-up hit or similar super hit, the 2026 performance will inevitably be questioned. The likelihood of repeatedly hitting super hits is too mystical; the capital market won’t gamble heavily on it.”

Zhang Shule believes that 2026 will be a year of not remaining silent but consolidating—stepping out of LABUBU’s ‘mania and frenzy,’ and focusing on refining IP. Even if performance isn’t dazzling, the trend can still turn positive.

Regarding external opinions, Wang Ning said at the earnings presentation: “Many people worry whether LABUBU is just a trend and whether it will fluctuate significantly. What reassures us is that we see it becoming more and more a part of people’s lifestyles. We are still full of expectations for the future and have confidence.”

Additionally, Wang Ning pointed out that Pop Mart doesn’t only have LABUBU. Even if all LABUBU’s performance is removed, Pop Mart still achieves rapid growth. He hopes the outside world will better recognize the platform’s ability to operate IP.

Regarding future LABUBU operations, Pop Mart COO Jiade stated that in the second half of the year, LABUBU will launch Series 4.0 and artist collaboration series. From a medium- and long-term perspective, LABUBU will also develop content formats such as picture books and movies, all currently in preparation.

Financial results show that, based on IP performance, besides LABUBU, six major IPs—including SKULLPANDA, CRYBABY, MOLLY, DIMOO, Star People, and others—each surpassed RMB 2 billion in revenue, while 17 IPs exceeded RMB 100 million. In the first half of 2025, there were 13 IPs with revenue over RMB 100 million.

SKULLPANDA was the second-largest revenue contributor among Pop Mart’s IPs in 2025, accounting for 9.5%. Star People was the fastest-growing emerging star IP, with revenue increasing from RMB 120 million in 2024 to RMB 2.06 billion in 2025, a year-over-year growth of 1602%, representing 5.5% of total revenue.

SKULLPANDA — Photo by The Paper’s Wu Yuxin

Can new businesses generate incremental growth?

At the earnings conference, Pop Mart announced that in April it will launch IP-based derivative small home appliances, which will be sold on platforms like JD.com. The small appliances include electric kettles, coffee machines, electric toothbrushes, hair dryers, and more. Currently, the company is in large-scale inventory preparation.

This is not Pop Mart’s first foray into new businesses. Previously, Pop Mart explored accessory stores, built Pop Mart City Theme Parks in Beijing, and announced a partnership with Sony Pictures Entertainment to produce a LABUBU live-action animated film.

Zhang Shule told The Paper: “A single IP going viral can be driven by short-term trends, but large-scale projects like theme parks require long-term temperature control and continuous warming. Producing a live-action animated film can maintain momentum and expand influence. Developing small appliances with low R&D costs and short cycles seems more effective in terms of implementation.”

Regarding how much performance growth these derivative small appliances can bring, an insider close to Pop Mart told The Paper that the appliances are fundamentally different from traditional home appliance industries. Looking at past paths through new categories like accessories, desserts, and building blocks, Pop Mart’s exploration of appliances will still revolve around IP. The goal is to broaden IP expression boundaries, allowing IP to accompany consumers in more diverse forms in daily life.

“From a performance standpoint, it’s still too early. It won’t have a significant impact on growth. Internally, expectations are not very high either,” said the insider.

Regarding Pop Mart’s new ventures, a consumer told The Paper: “I might support Pop Mart’s theme park and movies, but I’m not very interested in small appliances. Professionals should do professional work. Unless they make these appliances very professional, I won’t buy them. But theme parks and movies align with IP and Pop Mart’s strengths, so I’m willing to try.”

“Continuously cultivating old IP and creating high-quality new IP can bring more fun and dreams. To some extent, we can learn from Disney’s ‘Dreams Guard.’ Emotional consumption needs more focus on the ‘consumer’ itself. I think Pop Mart’s appeal has declined in recent months, and I feel that new IP is lacking momentum,” the consumer added.

From rapid growth to consolidation—has the growth ceiling been reached?

After high growth in 2025, has Pop Mart already peaked? Where is its moat?

The senior industry insider mentioned earlier told The Paper that for a truly IP-driven company, it must go through cycles, and IP needs to continually rejuvenate through long-term operation. “This is a huge challenge for Pop Mart. If we talk about a ceiling, it depends on how far an IP can accompany consumers. Behind that is continuous investment in IP.”

He believes that after experiencing high base growth in 2025, Pop Mart’s biggest challenge will come from internal organizational issues: “Last year, Pop Mart undertook large-scale global restructuring, dividing the company into four regions to support localized management. In the future, if Pop Mart can achieve more standardized and replicable sales models—allowing global channels to coordinate and fight together—that will become its core moat.”

It’s worth noting that despite the share price decline, many institutions still maintain buy ratings on Pop Mart.

Jiao Shang International believes that the management guidance for 2026 is conservative. It lowered profit forecasts and target prices but maintained a buy rating. Jiao Shang International stated that on the day of the earnings release, the stock fell over 20%, largely reflecting the market’s fears about slowing guidance. Based on the latest guidance and profit margin uncertainties, it set a new target price of HKD 232.80.

In a report, Ping An International noted that Pop Mart’s sharp share-price correction presents a good entry opportunity. The current valuation is attractive, and it maintains a “Buy” rating with a target price of HKD 284.5. CICC also maintained its outperform rating, with a target price of HKD 248.