Two days of 30% plunge! Why did the trendy toy giant crash? Some institutions have already reduced their holdings in advance.

Source: Securities China

Once driving young people to crazily “spend money,” the “first stock of blind boxes,” Pop Mart, has seen a decline of up to 30% in the past two trading days due to its latest financial data falling short of expectations, and when viewed over a longer period, it has already halved from its historical peak.

After the sharp decline, the company announced an emergency repurchase plan costing approximately HKD 600 million to stabilize its stock.

In the fourth quarter of last year, public funds showed a clear divergence in their attitudes towards Pop Mart: some top funds began to “vote with their feet” by reducing their holdings and withdrawing, while some institutions chose to increase their positions against the market trend. However, recent fund managers have stated that in the current environment where Hong Kong stock consumption investments have left behind the “dream rate,” “going overseas” to break through and global layout will be the key variables determining the future direction of these new consumer brands.

Pop Mart’s Stock Drops by 30% in Two Days

On the afternoon of March 25, after the market opened, the stock price of Pop Mart, a giant in the trendy toy sector, plummeted sharply, and by the close, there was no recovery, with a drop of over 22% and a single-day trading volume of HKD 24.5 billion, setting a historical record.

The sharp decline in stock price stemmed from the disclosure of the 2025 financial report at noon that day: the data showed that in 2025, Pop Mart achieved revenue of HKD 37.12 billion, a year-on-year increase of 184.71%; net profit was HKD 12.776 billion, a year-on-year increase of 308.76%. Although the performance growth rate is impressive, the revenue scale still lags behind the market expectation of HKD 38 billion, and analysts pointed out that the company’s growth is heavily reliant on a single hit IP, raising concerns about the upper limit of its performance growth.

On the 26th, Pop Mart continued to decline, with a drop of again over 10%, trading volume at HKD 15.4 billion, and closing at HKD 150.7 per share, with a two-day decline exceeding 30%, having halved from its historical high.

Multiple investment banks subsequently lowered the target price for the stock, with Goldman Sachs cutting the company’s profit forecast for 2026 to 2027 by 18%, significantly reducing the 12-month target price from HKD 300 to HKD 184, maintaining a neutral rating. Morgan Stanley also reduced its revenue forecast for 2026 to 2027 by 4% to 5%, net profit forecast down by about 4%, and target price lowered from HKD 325 to HKD 278, but maintained an overweight rating and preferred stock status.

After the market closed on March 26, Pop Mart announced on the Hong Kong Stock Exchange that it repurchased 3.94 million shares at a cost of approximately HKD 600 million.

What Do Fund Managers Think?

A fund manager with years of experience in Hong Kong stocks clearly stated in a recent roadshow that he has significantly lowered his profit expectations for some new consumer sector stocks. “The current phase of Hong Kong stock consumption investment has passed the ‘dream rate’ era. We are now more focused on the company’s ability to generate free cash flow, a resilient balance sheet, and practical dividend repurchase plans. For those new consumption models that still need to burn cash for growth and have shallow moats, we will maintain extreme restraint.”

In terms of active fund holdings, some once-optimistic top funds in the trendy toy sector have begun to “vote with their feet.” According to Wind data, in the fourth quarter of last year, public funds’ holdings of Pop Mart decreased from 46.3461 million shares at the end of Q3 2025 to 37.587 million shares at the end of Q4 2025. Among them, the number of funds heavily invested in Pop Mart dropped sharply from 180 at the end of Q3 2025 to 123 at the end of Q4 2025, while funds like E Fund’s Hong Kong Stock Connect Quality Growth and Southern Prosperity Driven not only reduced their holdings but also sold the stock out of their concentrated lists.

However, during the stock price decline, some funds resolutely chose to increase their positions. For instance, Ruifeng Hong Kong Stock Connect Core Value significantly increased its holding of Pop Mart by 2.45 million shares in Q4, and funds like Invesco Great Wall Stable Gain, Bank of Communications Industry Selection, and Yinhua Digital Economy also boosted their holdings by several hundred thousand shares. Notably, the aforementioned funds did not experience significant net value losses during Pop Mart’s sharp decline on March 25; for example, Invesco Great Wall Stable Gain fell by 1.12%, Bank of Communications Industry Selection fell by 1.02%, and Yinhua Digital Economy’s drop was only 0.16%.

Haitian Fund’s Zhou Han believes that as the “post-90s” and “post-00s” gradually become the main consumption force, the growth environment, value orientation, and consumption habits of this generational group differ greatly from their predecessors: they place greater emphasis on personalized expression, emotional value, a sense of life rituals, and social attributes. This change has created a large number of emerging consumer demands.

“These new demands not only change the consumption landscape but also promote the birth and rise of a batch of ‘new consumer brands.’ They often possess agile product iteration capabilities, strong content operation abilities, and precise user insights, utilizing social media to achieve low-cost and high-efficiency brand cold starts. These companies may not be large in scale, but their business models are more flexible and better able to adapt to rapidly changing consumption trends. Their existence proves that even in the context of slowing overall consumption growth, structural opportunities continue to thrive,” Zhou Han stated.

“Going Overseas” Remains a Key Variable

From the perspectives of multiple investment banks, it is not difficult to find that one major factor in Pop Mart’s stock price decline is that overseas growth has not met expectations. For instance, Goldman Sachs pointed out in its communication with investors that market reactions primarily reflect concerns about slowing growth, especially as third-party data from the U.S. indicates a continued slowdown since the beginning of the year.

A fund manager heavily invested in consumer stocks told reporters: “From the internal structure of consumption, domestic commodity consumption is good, primarily due to low prices, while looking at companies going overseas, the same product sells at a much higher price in the U.S. compared to domestically.”

A public fund manager from East China also noted that the current domestic economy has entered a stage of high-quality development, and expanding overseas incremental markets has become key for many consumer goods companies to maintain growth. Unlike the past emphasis on labor-intensive industry exports, today, companies that can continuously enhance value-added, brand strength, and global competitiveness are increasingly worthy of attention.

Guangfa Fund manager Sun Di introduced that he will focus on opportunities in three types of companies: the first type is overseas brand companies with global business layouts, the second type is consumer companies with continuous innovation capabilities; and the third type is high-quality consumer companies with growth potential.

Sun Di further stated that in the next one or two quarters, he will focus on services going overseas. Companies with significant overseas exposure in consumer goods are concentrated in automotive, home appliances, consumer electronics, as well as trendy toys, accessories, clothing, and other categories.

Editor: Yang Yucheng