Le Pop Mart shares, the famous Chinese manufacturer of Labubu dolls, have suffered a abrupt drop on Monday, September 8, marking the biggest drop in the last five months. After a year of spectacular growth, with the stock rising more than 500% thanks to the enthusiasm for collectible toys and blind-box sales, the shares, listed in Hong Kong, fell by 7,11% at 287,60 Hong Kong dollars, immediately after the company's entry into two major stock indexes: theHang Seng Index andHang Seng China Enterprises IndexIs this the end of Pop Mart's rally or just a temporary lull?
Read EVEN Labubu: Pop Mart conquers the world with its Chinese puppets
Who is Pop Mart and what are Labubu?
Founded in 2010 by Wang Ning In Beijing, Pop Mart is famous for its Labubu dolls, sold in mysterious packages called blind-boxes. These furry little dolls, with pointed teeth and imaginative shapes, stimulate collecting: the surprise format encourages the purchase of more pieces to complete the series, creating continuous demand.
Thanks to influencers and celebrities like Brad Pitt, Lisa from Blackpink, Dua Lipa, and Rihanna, Labubu have become a true global phenomenon. Special editions, often limited and hard to find, transform each Labubu into a status symbol, highly coveted even on the secondary market.
Over the past 501 months, Pop Mart shares have risen 215%, up 386% year-to-date, driven by Generation Z's enthusiasm for designer toys, bringing its market cap to HK$49,6 billion (about $XNUMX billion) and making its founder one of China's youngest billionaires.
Pop Mart: Why did the stock crash?
The recent crollo of the title was caused by several interconnected factors. The first concerns the launch of the new mini Labubu, which showed signs of weaker demand in the secondary marketCollectors are buying less than in the past, and resale prices are fallingAccording to Qiandao, a platform specializing in the resale of Pop toys, third-generation Labubu dolls have lost 4% in the past three days, while the first two generations have remained stable. The average price of mini Labubu dolls has dropped 6 yuan ($0,84) in the past week, settling at 105 yuan, according to Xianyu, Alibaba's second-hand platform. Jeff Zhang of Morningstar Inc. He noted, "Prices in the secondary market are falling due to restocking and cooling demand for some series." Additionally, negative feedback has emerged about the quality of new products, a problem management must address quickly.
Profit taking and market dynamics
In addition to the weakness in the secondary market, the decline in Pop Mart shares was amplified by taken of profit of investors. After weeks of strong growth, many have decided to sell to cash in on their accumulated gains. Added to this is thetitle entry in the indexes Hang Seng e Hang Seng China Enterprises, which in the previous weeks had generated a artificial price increase, further prompting some investors to exploit the opportunity. The result was increased selling volume, with record levels of short selling, which further increased the downward pressure on the market.
Pop Mart on the Stock Market: Opportunity or Risk?
Not everyone sees black. Second Morgan Stanley, the current correction could represent a purchasing opportunity, thanks to Pop Mart's strong intellectual property portfolio and direct-to-consumer model, which limits distribution and fuels demand in official stores. Price reductions in the secondary market could lead to a more sustainable balance in the long term.
Today's sharp decline therefore appears to be a phase of recalibration: on the one hand, the company's track record of exceptional growth, on the other, the need to better manage market saturation and the perception of the quality of new products.
