Pop Mart Shares Drop Despite Forecast of 350% Profit Surge as Investor Caution Sets In

Pop Mart projected a 350% increase in profit and 200% revenue growth for the first half of 2025.

The bullish outlook follows a strong 2024, where H1 profits grew 93.3% and revenue jumped 62%. Shares dropped over 6%, suggesting investors were unimpressed by the earnings forecast.

Analyst Jeff Zhang (Morningstar) said the reaction reflects concerns that sales growth may have peaked and could slow in H2.

“Despite stellar earnings growth in H1, it may have peaked and will likely see a slowdown starting in H2,” Zhang said, adding that it may have prompted many investors to take profits.

The stock has nearly tripled year to date, leading some investors to take profits after the announcement.

The company credits its success to strong brand recognition and the viral appeal of IPs like Labubu, Molly, and Crybaby. Global expansion, with overseas revenue contributing nearly 40% in 2024, also helps. Cost optimization and economies of scale improved the company’s profit margins.

The Labubu doll in particular has become a cultural sensation, even selling for $150,000 at auction.

Pop Mart is best known for “blind boxes,” where customers don’t know which toy they’ll receive until opening.

The model, popular with Gen Z and millennials, has drawn criticism for encouraging impulsive buying.

“When optimism about long-term financial prospects fades, people shift from investing in the future [buying] homes and cars to seeking momentary emotional rewards,” said Ivy Yang, founder of Wavelet Strategy, a New York-based consultancy.

A state media editorial last month warned against child-targeted marketing, but concerns of a crackdown haven’t dented adult consumer enthusiasm.

Pop Mart now operates over 2,000 stores and vending machines worldwide. US expansion is accelerating, with sales surging 5,000% YoY in June and celebrity endorsements from Kim Kardashian and K-pop stars fueling demand. Partnerships with Coca-Cola and One Piece have broadened its brand appeal.

The popularity of Labubu has spawned a counterfeit market, prompting Chinese authorities to seize over 46,000 fake toys in June.

Despite booming demand, analysts warn about overreliance on a few characters and long-term IP fatigue.

Despite the pullback, investment banks remain bullish. Nomura raised its target price to HK$330, naming Pop Mart a top China consumer pick.

However, the company’s future hinges on continued global expansion (especially in the US), sustained popularity of key IPs like Labubu, and navigating regulatory and market saturation risks.

With input from CNBC and BBC.