BEIJING — Shares of Pop Mart, the company known for its Labubu figures, faced a steep decline on Friday after Morgan Stanley removed the stock from its focus list. This downturn coincided with state media advocating for tighter regulations on “blind box” toys.
Pop Mart gained widespread acclaim for its “blind box” business model, where customers purchase sealed boxes — priced between $5 to $10 — in hopes of obtaining unique figurines to expand their collections.
In an article published today, People’s Daily, the official newspaper of the Chinese Communist Party, criticized the speculative nature of the “blind box” trend. The report emphasized the need for stricter regulations without specifically naming Pop Mart, focusing instead on the spending habits of children and young adults on these unmarked packages.
This month, China’s customs authority also highlighted via social media its interventions to prevent counterfeits of Labubu toys from entering the country.
Pop Mart’s shares, which are listed in Hong Kong, fell over 5% on Friday, compounding a previous day’s loss of 5.3%. These fluctuations set the stage for Pop Mart’s first negative week since early May, with a total decline exceeding 13%. Despite recent setbacks, the company’s stock had seen an impressive year-to-date surge exceeding 160%.
Morgan Stanley, in a note released Wednesday, replaced Pop Mart with insurance provider PICC P&C on its focus list for China and Hong Kong. The firm did not specify the rationale behind its decision.
On June 10, Morgan Stanley had raised its price target for Pop Mart to 302 Hong Kong dollars ($38.47) from 224 HKD, indicating expectations for the company’s long-term growth potential.
Equity analyst Dustin Wei and his colleagues noted, “We believe the market has adequately priced in Pop Mart’s rapid growth for 2025, but there seems to be a lack of strong confidence in the long-term outlook.” They also cautioned that due to the high valuation, the current levels of performance might not persist in the upcoming quarters.
On June 12, Pop Mart’s shares reached an intraday peak of 283.40 HKD.
The Beijing-based company has rapidly expanded its presence internationally, establishing both online sales channels and physical retail locations in markets such as the U.S. and the U.K.
The Labubu phenomenon
Recently, the company’s “Labubu” toy series, which features a whimsical, elf-like character, has become a global sensation, even gaining attention from prominent publications including New York Magazine and The New York Times.
In response to rising demand, Pop Mart has launched Labubu-themed stuffed animals, pillows, and various merchandise. Earlier this month, a four-foot-tall Labubu figure sold for an astonishing $170,000 at an auction in Beijing, while other, more affordable versions quickly sold out in mainland China.
Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, noted that such trends are not uncommon, remarking, “There always seems to be a cute fad that captures people’s attention.” His company specializes in helping foreign brands sell products in China and other parts of Asia.
He drew parallels to last year’s surge in popularity of capybara stuffed toys, mentioning Miniso as a key retailer during that trend, which also operates stores in the U.S. and various countries.
Cooke described Pop Mart’s recent success as more of a stroke of luck, while acknowledging it reflects a growing interest in collectible toys for both children and adults.
The remarkable surge in the company’s popularity is evident; international sales in 2024 have already surpassed the total sales recorded by Pop Mart for the entirety of 2021.
The company revealed that its overall domestic sales reached 4.49 billion yuan ($624.6 million) in 2021, while its overseas sales for 2024 exceeded that figure at 5.1 billion yuan, marking an astounding 373% increase year-on-year. Meanwhile, sales in mainland China also rose to 7.97 billion yuan.
