Xingrui's "Star People" product reveals Bubble Mart's performance risks

Inspector in Baker Street Case Files

Pop Mart has used every ounce of effort, yet it hasn’t managed to replicate LABUBU—on the contrary, it could even reduce its gross margin

Author丨Bao Kemeng

If you only look at the financial reports, Pop Mart’s year can almost be described as “explosive.”

In 2025, revenue was 37.12 billion yuan, up 184.7% year over year; adjusted net profit was 13.08 billion yuan, up 284.5%. For ordinary people, this kind of growth increase has almost no flaws.

But judging by market reaction, once Pop Mart released its earnings report, the stock price plunged immediately—down more than 20% in a single day. Trading volume expanded to several times its usual level. Over two days, the stock fell by about 30%, and the market value evaporated by roughly HK$89 billion.

That’s the question: if it’s making so much money, why is the stock price dropping so much instead?

The label Tonghuashun gives Pop Mart is “China’s largest and fastest-growing trend toy company.” With the words “largest,” “fastest-growing,” and “trend” placed in front of “toy company,” in the market’s eyes, Pop Mart’s 2025 performance growth increase is also based on those descriptors.

Because the market is always right. When a company’s results look so impressive, but the stock keeps falling again and again, there must be reasons that make the drop unavoidable. The answer is actually very simple—and also very harsh: the market isn’t doubting that it “is making money now.” What it’s doubting is whether it can keep making money like this in the future.

_01_Too dependent on LABUBU, you can’t see its innovation power

From the company’s financial reports, Pop Mart’s core IP, LABUBU (THE MONSTERS), contributes 38.1% of revenue. The concentration hasn’t declined noticeably, and the high dependence has brought in revenue that is still below the market’s expectation of 38 billion yuan. This is where the funds are truly panicking.

Because in capital markets, what’s most valuable isn’t “growth,” but “sustainable growth.”

More importantly, LABUBU generated 4.81 billion yuan in revenue in the first half of the year and 9.35 billion yuan in the second half—almost doubling. Even with this explosive sales growth, it still couldn’t push Pop Mart’s performance beyond market expectations. The market can’t imagine what else could drive Pop Mart’s performance to exceed expectations.

In other words, the market doesn’t know whether Pop Mart’s 2025 performance is a one-off burst, or whether LABUBU could become a super IP.

In terms of innovation, Xingxinger is the fastest-growing star-tier IP under Pop Mart. Its revenue grew from 120 million yuan in 2024 to 2.06 billion yuan in 2025, a year-over-year growth rate of 1602%.

At first glance, this achievement looks extremely impressive—but my personal guess is that the market may also have spotted Pop Mart’s hidden concerns from Xingxinger.

_02_The AB side of Xingxinger’s sales explosion

Putting these two IPs—LABUBU and Xingxinger—together, the difference is actually quite striking.

LABUBU’s path is, in essence, a “slow-heating natural explosion.” It was pushed into the market for nearly 10 years, staying lukewarm and never really catching on. Only in the past two years did it hit several key nodes—among other things, the bifurcation of social media, celebrity-driven e-commerce endorsements, and the spread of niche subculture—before suddenly entering an exponential communication phase. Sales took off quickly, and it even has the potential to be adapted into film and television works, benchmarking Disney.

Looking back on this process, LABUBU’s sales performance today looks more like the result of “the market choosing it on its own.” After user emotions, the communication environment, and the IP image resonated, everything amplified naturally. Once an IP manages to break out, it often has strong staying power, because it isn’t “pushed red.” It’s “picked up and made famous” by consumers on their own.

But Xingxinger’s path is completely different. According to Pop Mart, this is a typical “operation-driven IP.” After LABUBU’s success, the company began to consciously replicate the playbook. In multiple key cities worldwide, it densely organized large-scale offline themed exhibitions. Combined with content marketing, increased channel exposure, and event tie-ins, it kept “adding fuel” to the IP, continually strengthening its presence—ultimately driving sales upward.

The problem is precisely here.

If LABUBU’s explosion is “riding the trend,” then Xingxinger is more like “being pushed hard by manpower.” The former is driven by user self-propagation; the latter is driven by the company’s strong operations. The former relies more on emotional resonance; the latter depends more on piling up exposure. The fundamental difference is this: one is “content that runs on its own,” and the other is “content that must be pushed to run.”

What’s reflected behind this is actually not that capabilities have improved, but another hidden concern—Pop Mart’s new IP is becoming increasingly dependent on operations, not on the content itself.

The emergence of Xingxinger can only prove that Pop Mart is indeed trying to prove that “the company can manufacture breakout hits.” But reality is concerning: an IP company must push an IP to a sizable scale only through higher-frequency, higher-investment marketing actions.

Against this backdrop, the replicability shown by Pop Mart’s LABUBU has been directly discounted—making it even more obvious that LABUBU’s success is hard to replicate. This is also understandable. No matter which IP it is, its breakout in essence is a product of “timing, geographic advantage, and people working together.” But this “heavy-operations model” like Xingxinger, while it looks controllable, once it needs continuous increases in investment to sustain growth, the marginal cost of replication rises rapidly.

More importantly, Xingxinger once again emphasized that the efficiency of IP monetization is declining.

An IP that grows out of natural communication has a marginal customer acquisition cost close to zero. But an IP that keeps “feeding traffic” through exhibitions, events, and ad placements is, in essence, trading costs for revenue. From the surface, revenue looks like it’s been built up. But the underlying “true profitability” and “growth quality” are actually being diluted.

So you’ll find a subtle shift: in the LABUBU era, market discussion was about whether another breakout hit like that could still be produced. But with Xingxinger, the question becomes whether the company must spend even more effort to recreate something that looks like a breakout hit.

That’s why, even though the number of IPs in the financial reports is increasing and the revenue mix is becoming more diversified, investors are actually more anxious. Because what they see isn’t a “system that keeps producing breakout hits nonstop.” Instead, it’s an IP machine that relies increasingly on human intervention, and growth is becoming heavier.

Originally, an IP company is absolutely asset-light. The market pursues precisely this kind of approach: at most paying a one-off, substantial design fee, letting the content attract consumers to monetize itself and deliver huge returns—thereby pushing the company’s gross margin to its limits. But Xingxinger overturns the market-accepted model. After paying a certain objective design fee, it also has to keep investing in marketing costs. In return, it only brings sales that don’t even make up a fraction of LABUBU’s. With such a comparison, how could the market not worry?

_03_What is an IP company

Let’s narrow our focus further on Pop Mart: dissect whether it truly is an IP company.

Go look at Pop Mart’s financial reports, and you’ll find that Pop Mart is “winning on all fronts.” LABUBU accounts for only about 30% of total revenue. The rest is supported by other IP product lines. The revenue structure is also changing: revenue from plush products exceeded 50% for the first time. It reached 18.7 billion yuan, accounting for 50.4%. From the publicity framing, plush products are positioned as “companionship,” with losses, and the repurchase rate is higher than the first-tier cards used for collecting. Meanwhile, overseas revenue share has also increased to 43.8%, and net cash has reached 17.2 billion yuan. So why is the market still not buying in?

Because Pop Mart is being placed into an unsuitable framework.

If you can’t quite grasp it, put Pop Mart alongside IPs that everyone knows well—Disney, Kweichow Moutai—and the issue becomes clear. Disney’s IP can live for decades; the older it gets, the more valuable it becomes. It’s a typical “time-compounding asset.” As for Kweichow Moutai, the essence of its IP is a “never-outdated symbol” formed by “culture + scarcity.” By contrast, when LeTV had problems back then, it was that the story was told too big, but the business structure couldn’t support it.

Pop Mart’s awkwardness right now is that it’s not as easy to “prove” as Disney, and it’s not as obviously “problematic” as LeTV. So the market simply treats it in the most conservative way—regarding it as a “trend brand company.” This directly suppresses the valuation.

Now it’s roughly 15x PE, while Sanrio and Nintendo are both above 25x. The key is that their profit margins and growth rates are even higher. This actually shows one thing: the market hasn’t yet acknowledged it as an “IP company.”

So this time, Pop Mart’s continued stock price decline is, in essence, not a performance problem—it’s a conflict in understanding.

The company is transforming toward the direction of “creating IP that can be sustained,” and you can see that from the financial reports. But the market not only believes that Pop Mart has only one breakout hit—it is also questioning Pop Mart’s ability to create breakout-hit content. Please note: “creating breakout hits” and “creating breakout-hit content” are two different things. The former can pile up resources and strongly push a product that the market doesn’t recognize. The latter is when the market votes with its feet and actively pushes it up.

Only when Pop Mart can make the market clearly recognize that it is a breakout-hit content manufacturing company will its valuation truly recover. Until then, it will inevitably be questioned and undervalued again and again.

If you still can’t quite understand, you can compare with Sanrio again. With IPs like Hello Kitty—after decades, there’s almost no concept of “a breakout period.” It has been selling continuously, and there’s always someone buying. Sanrio’s core capability isn’t “making breakout hits.” It’s the ability to keep an IP from going out of date over the long term: continuously changing skins, changing collaborations, changing scenarios, but keeping the core image stable. You can understand it as its IP not living on “hype,” but on “a sense of companionship” and “light emotional reliance.”

Source of image: Sanrio official website

Now look at Nintendo, and the logic is completely different. Nintendo’s IP—like Mario and Zelda—by essence isn’t “selling characters.” It’s selling the gaming experience. IP is just the entry point; the real core is the game content itself. Every time a new game is released, it’s an IP “rebirth” and “upgrade.”

It’s undeniable that LABUBU helped Pop Mart make money. But what the market truly wants to know is: when the next LABUBU hasn’t appeared yet, what is it about Pop Mart that makes it still worth so much money?

Conclusion

Today, Pop Mart is in a very delicate position.

On one side, super IPs like LABUBU—chosen by the market—make it look like there’s a chance of becoming the next Disney. On the other side, an IP like Xingxinger—seen as being pushed out—makes people begin to wonder whether it’s only a more complex consumer brand.

If future breakout hits look more and more like LABUBU—driven by user self-propagation and growing naturally—then its ceiling is Disney. But if they increasingly look like Xingxinger—built up layer by layer through exhibitions, advertising placements, and collaborations—then its endgame is closer to a mass-market fast-moving consumer goods company, just with more breakout hits.

And this is where the capital market is most sensitive: it’s not afraid you make less money; it’s afraid that you can only “use more effort to make the same amount,” because that implies declining profit margins.

That’s why a financial report where profits triple does not bring applause, but instead triggers selling in the secondary market. Because everyone is watching the same question: when Pop Mart no longer pushes IP with all its might, what will be left of this company?