Pop Mart stock price halves amid market concerns over Labubu reliance

Hong Kong-listed Chinese toy brand Pop Mart has seen its stock price plummet, closing at HK$150.7 on July 10, a 55.7% decrease from its peak in August 2025. This significant decline has occurred despite the company reporting robust financial results for 2025.

Amidst the stock's downturn, prominent investor Duan Yongping, known as the "Buffett of China," has increased his holdings. Through his entity H&H International Investment, Duan acquired an additional 10.59 million Pop Mart shares between July 6 and July 10, raising his total stake to 101.86 million shares, or 7.65%. This move makes him the second-largest shareholder, following founder Wang Ning. The investment reportedly cost around HK$1.59 billion (NT$6.52 billion).

Duan Yongping expressed confidence in Pop Mart's business model, stating that the company has achieved substantial profits and its average profit margin is unlikely to fall below current levels in the next 10 to 30 years. He first invested in the company in May 2025, spending approximately HK$1.47 billion (NT$6.03 billion) for 9.82 million shares.

However, the market remains skeptical. Following the release of Pop Mart's 2025 earnings, which showed a 184.7% year-on-year revenue increase to RMB 37.12 billion and a 284.5% rise in adjusted net profit to RMB 13.08 billion, the stock price dropped sharply. Analysts widely worry about a structural risk stemming from Pop Mart's over-reliance on its single product, Labubu. The underperformance of some new regular product series after their launch appears to validate these market concerns, suggesting that Pop Mart's ability to convert "emotional value" into stable, long-term consumer demand and diversify its business remains uncertain.

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Pop Mart has achieved substantial profits, its business model has been validated, and its average profit margin will not be lower than the current level in the next 10 or 30 years.