Labubu's creator experienced the strongest stock crash in 1.5 months. What spooked the market?

China's Pop Mart International Group, a maker of Labooboo toys and other popular accessories, experienced the most precipitous drop in stock prices in recent weeks on December 8. The reason for the collapse could be renewed concerns about the slowdown in Pop Mart's sales growth in the key U.S. market for the company.

Trading in shares of Pop Mart in Hong Kong opened with growth of 0.5%. But then the market turned around and quotations collapsed by 9% - to 199 Hong Kong dollars ($25.6) per share ($25.6), which is 41% below the August maximum. The fall was the worst in more than six weeks.

Market participants point to concerns that Pop Mart's Black Friday sales in the United States may not have met investors' expectations, Bloomberg writes. "Potentially weak sales in the United States could undermine market confidence in Pop Mart's growth," the agency quoted Morningstar analyst Jeff Zhang as saying.

In early December, Deutsche Bank warned that Pop Mart had increased its capacity to produce Labooboo toys fivefold from 10 million to 50 million pieces per month in the second half of 2025, but the markup on Labooboo and the company's other popular characters in the secondary market has been falling since August. In a pessimistic scenario, Pop Mart's sales in 2026 could decline 20% in the PRC and 10% in overseas markets, Deutsche Bank suggested and gave Pop Mart's shares a Neutral rating (Hold) with a target price of HK$228 ($29.3).

Morgan Stanley forecasts Labubu's sales in 2025 at 15.5 billion yuan ($2.2 billion) - 41 times higher than two years earlier. However, revenue growth will become more moderate in 2026 due to partial customer churn, one of Wall Street's biggest banks said. In late November, it cut its target price on Pop Mart shares by 15% to HK$325 ($41.77), but maintained an "above market" rating (Overweight, consistent with a buy recommendation).

If three months ago on Wall Street there was not a single recommendation to sell shares of Pop Mart, now among more than 30 analysts watching this paper, there is one "bear", according to data from WSJ Markets, - with a rating "below market" (Underweight). Against the general background it looks like a statistical error: 28 experts adhere to the ratings Buy and Overweight (both are recommendations to buy shares), three more advise to "hold" (Hold) securities of the Chinese brand. The average target price of Pop Mart shares calculated by MarketScreener assumes growth of quotations by 61% on the horizon of one year.

This article was AI-translated and verified by a human editor