Profit triples, but market value evaporates by 100 billion. Suddenly, it went from the darling of capital to being abandoned. What's going on with Pop Mart?

Ask AI · Why Has Pop Mart’s Overreliance on Labubu Raised Market Concerns?

Image source: Visual China

By Wu Zhe

Edited by Sun Chunfang

Produced by Prism · Tencent Xiaoman Studio

Bright performance, but instead of boosting the stock price, it caused it to plummet. Pop Mart (09992.HK)’s stock performance over the past three days has caught many investors off guard.

On March 25, Pop Mart officially released its 2025 annual report. This was a long-anticipated moment for the market, yet it became the starting point for a sharp decline in the stock price.

That afternoon, Pop Mart’s share price plunged sharply, closing down 22.51%, with the stock closing at HK$168.3 per share. On that day, its market value evaporated by over HK$65 billion. The next day, the decline continued, with a drop of 10.46%. Over two days, the total decline in share price reached 32.97%, collectively wiping out approximately HK$90 billion in market capitalization.

Compared to the peak last year, Pop Mart’s market value has been halved.

To stabilize market sentiment, on March 26, Pop Mart began share repurchases. That day, Pop Mart announced it would spend HK$599 million to buy back 3.94 million shares, at a price range of HK$148.4 to HK$157.8 per share. At the opening on the following day, Pop Mart’s stock briefly rose by 3.5%, but ultimately closed down 0.73%.

Contrasting sharply with the stock’s decline, Pop Mart’s 2025 financial report was remarkably explosive, with all key financial indicators reaching record highs.

2025 marked Pop Mart’s 15th year since its founding. That year, revenue reached RMB 37.12 billion, a year-over-year increase of 184.7%; net profit was RMB 12.776 billion, up 308.8% YoY; adjusted net profit was RMB 13.08 billion, with growth of 284.5%. Its gross profit margin exceeded 70%, and net profit margin surpassed 30%, making it nearly unmatched in the consumer industry—except for Moutai.

A nearly perfect financial report—why did it trigger panic in the capital markets? This has become a hot topic among Pop Mart shareholders.

An IP supporting 38% of revenue

In Pop Mart’s 2025 annual report, Labubu unsurprisingly became the core contributor to revenue.

This Nordic forest elf IP, with nine teeth and a pair of upright ears, was created in 2015 by designer Long Jia Sheng. However, Labubu did not immediately become a market sensation upon launch. In its early years, it remained within niche circles until 2024, when it exploded globally, quickly becoming one of the top trending collectibles worldwide.

In 2024, the THE MONSTERS series to which Labubu belongs achieved RMB 3.04 billion in revenue, a 726.6% increase year-over-year, accounting for 23.3% of Pop Mart’s total revenue that year. With this performance, Labubu surpassed Molly for the first time to become Pop Mart’s largest IP.

Entering 2025, Labubu’s revenue further exploded, becoming Pop Mart’s first super IP to surpass RMB 10 billion in revenue. Data shows that in that year, Labubu achieved RMB 14.16 billion in revenue, a 365.7% increase YoY, representing 38.1% of total revenue.

For toy and collectible companies, IP is their core asset for establishing a foothold and maintaining competitiveness in the market.

After 15 years of development, Pop Mart has built a diversified IP portfolio, including Labubu. There are six IPs with revenue exceeding RMB 2 billion, and 17 IPs with revenue over RMB 100 million.

Besides Labubu, the IPs with revenue over RMB 2 billion include SKULLPANDA, CRYBABY, MOLLY, DIMOO, and Star Person, with revenues of RMB 3.54 billion, RMB 2.93 billion, RMB 2.9 billion, RMB 2.78 billion, and RMB 2.06 billion respectively. This means that the combined revenue of the top five other IPs is RMB 14.21 billion, roughly comparable to Labubu’s revenue.

Additionally, overseas markets are a key focus for Pop Mart.

In 2025, Pop Mart made its first large-scale organizational restructuring, accelerating its global expansion.

That year, its global store count reached 630, a net increase of 109 stores. Overseas revenue hit RMB 16.27 billion, up 291.9% YoY, increasing its share of total revenue to 43.8%. Notably, markets in the Americas and Europe experienced explosive growth, with increases of 748.4% and 506.3%, respectively.

Wang Ning almost created another Pop Mart overseas.

Although Pop Mart did not disclose Labubu’s overseas sales separately in its 2025 report, some analysts estimate that Labubu’s overseas sales already account for over half of its total revenue, with some Western markets exceeding 70%. Without Labubu, it would be difficult for Pop Mart’s other IPs to quickly gain recognition abroad.

Looking back at Labubu’s rise, its success is closely tied to overseas markets. Some analysts believe that Labubu’s overseas popularity provided Pop Mart with the opportunity to expand globally.

In April 2024, Lisa, a member of the globally popular girl group BLACKPINK, posted multiple photos of Labubu on social media, instantly igniting the Thai market. Subsequently, Labubu received official recognition in Thailand, even appearing as a “special guest” during a Thai cultural festival.

Under Lisa’s influence, international stars like Rihanna and Beckham also posted their own Labubu. In April 2024, when Pop Mart launched the “High Energy Ahead” Labubu series, queues formed at Pop Mart’s offline stores in major cities like Los Angeles, Milan, and London.

Last November, during the 99th Macy’s Thanksgiving Day Parade, Labubu became the first collectible/toy IP to participate in the event.

Market doubts resurface

As one of the hottest IPs globally in 2025, Labubu holds critical strategic importance for both Pop Mart’s domestic and international markets. Its performance directly influences the company’s overall development.

In January, Citigroup released a global consumer survey covering 1,501 respondents across China, the U.S., Australia, the U.K., and Japan. The report found that Labubu remains the most attractive core IP, with 47% of respondents owning a Labubu, and nearly half first encountering Pop Mart because of Labubu.

After the release of the 2025 annual report, Pop Mart’s stock price plummeted. Many analysts attributed this to the company’s “single-IP dependence” pattern. They argue that over-reliance on Labubu could pose long-term risks and undermine Pop Mart’s profitability and resilience.

This skepticism is not new. As early as August last year, when Pop Mart released its mid-year 2025 financials, dependence on Labubu was already evident.

The report showed that in the first half of 2025, the THE MONSTERS series, including Labubu, generated RMB 4.81 billion in revenue, accounting for 34.7% of total revenue—slightly below the 38.1% in the full-year report but still highlighting its central role.

In response to doubts at the time, Wang Ning stated during the 2025 earnings call that this proportion did not pose a risk; rather, it demonstrated the platform’s ability to operate IPs. He emphasized that continuously launching original IPs proves Pop Mart has built a relatively healthy platform system, not relying solely on a single character.

On March 25, during the earnings presentation, Wang Ning addressed renewed market concerns.

“Pop Mart doesn’t only have LABUBU,” Wang Ning said. “Labubu performed outstandingly in 2025, but even if we remove all Labubu’s contribution, Pop Mart still achieved rapid growth. We hope the outside world can see more of Pop Mart’s ability to operate IPs, and believe that this experience and capability can be replicated.”

From the financials alone, Wang Ning’s statement has some data backing.

The report shows that in 2025, excluding Labubu’s RMB 14.16 billion revenue, Pop Mart’s other businesses generated RMB 22.96 billion. In 2024, excluding Labubu’s RMB 3.04 billion, other businesses’ revenue was RMB 10 billion. This indicates that Pop Mart’s other businesses maintained strong growth over the past year.

Particularly Star Person, a new IP signed in 2024, which in just over a year has become Pop Mart’s sixth-largest IP. The 2025 financial report shows Star Person’s sales reached RMB 2.056 billion, a 1,602% increase YoY.

However, since listing on the Hong Kong Stock Exchange, Pop Mart has never again seen an IP account for 38% of total revenue.

Molly was Pop Mart’s first breakout IP, contributing most of its revenue in earlier years. Data shows that before its IPO in 2019, Molly’s share of total revenue was still 27%. At that time, Pop Mart’s IP matrix was already taking shape.

But since going public in December 2020, Molly’s share has never exceeded 20%, hovering around 15%.

Even so, external doubts about Pop Mart often focused on its dependence on Molly.

Did foreign institutions start selling first?

Looking back at Pop Mart’s growth, its stock price has repeatedly fluctuated amid waves of hype and skepticism, each cycle reshaping the market’s valuation of the company.

On December 11, 2020, as the “first blind box stock,” Pop Mart officially listed on the Hong Kong Stock Exchange. Its opening surge doubled the stock price, driving many investors into frenzy. Some praised blind boxes as a new consumer track and regarded Pop Mart as an IP empire comparable to Disney.

Three months later, the stock reached a high of HK$107 per share, with a market cap of HK$140 billion.

But this enthusiasm didn’t last long. In late 2021, doubts about the blind box model grew—criticisms of “inducing consumption” and “addictiveness.” Pop Mart’s stock then entered a prolonged decline. By October 2022, its share price had fallen below HK$10, a 90% drop from its peak, with market cap evaporating over HK$100 billion.

During that period, the market widely viewed Pop Mart as a “valuation bubble burst” case.

It wasn’t until Labubu’s explosion in 2024 that Pop Mart regained favor. Its stock price soared from the teens to a peak of RMB 339.8 per share within just over a year, multiplying more than tenfold, with a market cap surpassing RMB 450 billion—comparable to major domestic internet giants.

Pop Mart’s founder, Wang Ning, also saw his wealth soar. In June 2025, Forbes’ real-time billionaire list valued him at USD 20.3 billion, surpassing Muyuan Group founder Qin Yinglin to become Henan’s richest person.

Now, the story of “great success leading to decline” plays out again, with Pop Mart’s stock price back to last year’s level. During the earnings briefing, Wang Ning gave a “moderate” outlook—aiming for at least 20% growth in 2026.

“From last year’s roughly 300% profit growth rate, dropping directly to a forecast of 20%—that’s a huge blow to market confidence,” commented an investor on a stock forum.

“Like F1, we hope 2026 will be a year of pit stops—refueling, tire changes, and adjustments. After rapid development, we want to pause and recalibrate,” Wang Ning said at the earnings briefing. He also repeatedly mentioned that the explosive growth in 2025 was unexpected.

Over the past two years, amid Labubu’s breakout and overseas markets’ rapid expansion, the capital market has been willing to assign higher P/E ratios to Pop Mart, believing this is a “high-growth” story—Pop Mart is becoming a consumer giant capable of taking toy and collectible culture worldwide.

But when growth slows from 180% to 20%, the narrative shifts: is today’s Pop Mart a “growth stock,” or a mature “cyclical stock”?

It’s noteworthy that during the two days of stock price crashes on March 25 and 26, foreign institutional investors were the main sellers.

On March 25, the top five sellers were Citibank, Hong Kong Stock Connect (Shanghai), Standard Chartered Bank, BNP Paribas, and Guotai Junan, net selling 2.257 million, 417,200, 291,400, 216,500, and 201,800 shares respectively. On March 26, the top five sellers were Merrill, HSBC Hong Kong (Shanghai), Morgan Stanley, Citibank, and Goldman Sachs, net selling 2.5997 million, 1.1813 million, 1.0691 million, 486,200, and 419,100 shares respectively.

In the preceding one or two months, foreign institutions like Morgan Stanley had generally maintained optimistic expectations for Pop Mart.