Performance Doubled, Then Hit the Brakes: Popmart Bids Farewell to the "Blockbuster Leverage" Era

Pop Mart remains the same performance doubling entity, but the market no longer buys it.

On March 25, Pop Mart disclosed its latest financial report: revenue of 37.12 billion yuan, up 184.7% year-over-year; adjusted net profit of 13.08 billion yuan, up 284.5%; gross profit margin of 72.1% and adjusted net profit margin of 35.2%, both at historical highs.

Objectively, this is a financial report that can hardly be called “losing luster,” but market expectations for Pop Mart were clearly higher.

Over the past year, many investment banks have repeatedly raised their target prices, based on core logic: IP popularity, overseas expansion potential, and category expansion prospects. When the financial report failed to further reinforce the long-term narrative of a “global IP platform,” a price correction was almost inevitable.

At the earnings conference, Pop Mart CEO Wang Ning provided a 20% growth guidance for 2026 and explicitly stated that they would not sacrifice profits for scale expansion.

This “steady” stance, in the eyes of capital markets accustomed to 100% or even 200% growth over the past two years, more resembles an emergency brake.

However, before the financial report was released, market sentiment had already shown subtle cracks.

From controversies over new IPs’ reputation, to the continued decline in secondary market premiums, and to plush toys and figurines no longer out of stock on store shelves, every detail was eroding investor confidence.

Pessimism and panic spiraled after the release of the financial report, ultimately triggering a fierce sell-off—Pop Mart experienced its largest single-day drop and turnover rate in nearly three years.

For Pop Mart, more unsettling than “LABUBU sales are slowing” is the chain reaction caused by the continuous retreat of traffic and attention.

This pain after the decline of dividends has become an unavoidable tough battle for Pop Mart now.

Where is the expectation gap?

Pop Mart’s “disappointment” is essentially not a total collapse of scale, but the failure to meet some optimistic expectations.

After the third quarter report, Morgan Stanley predicted a 26% growth in 2026 and 20% in 2027, which is almost consistent with the company’s guidance this time.

Some investors analyze that after a significant rise over the past year, the market’s holdings structure has become heavily tilted toward “high-expectation funds.”

In this context, if the company’s fundamentals are acceptable but performance does not exceed expectations, and management guidance becomes conservative, funds will naturally take profits and exit, making a sell-off almost unavoidable.

Looking at the data, the core bleeding point in Q4 domestically. The previous Q3 performance announcement showed domestic growth of 185%-190%, but the actual growth in the second half of the year was only 135%, confirming a significant month-over-month decline in Q4.

The overseas market performance has become one of the biggest points of divergence after the financial report.

Pop Mart COO Sid stated that in 2024, North American sales will be about 800 million yuan, and by 2025, it will reach 6.8 billion yuan, below the internal expectation of 7 billion yuan at mid-year.

The peculiarity of the North American market is its high online penetration, reaching 64%. Management explained that this is mainly due to insufficient offline store capacity, leading to a shift of products to online channels.

Against the backdrop of overall slowing growth, reliance on IP—this “old chestnut”—has been magnified again by the market.

From an IP structure perspective, THE MONSTERS series featuring LABUBU saw a concentrated restocking period in the second half, with annual revenue reaching 14.1 billion yuan, accounting for over 38%, up from 34.7% in the first half.

Despite other IPs showing highlights—second-tier IPs like SKULLPANDA, CRYBABY, MOLLY, and DIMMO each earning over 2.7 billion yuan, and “Star People” skyrocketing 16-fold year-over-year to 2 billion yuan within a year—the massive scale of LABUBU has set a high benchmark, making it exponentially harder for backup IPs to match its contribution.

Another noteworthy data point: despite a 57.5% surge in total Pop Mart members, the annual revenue growth of the core IP MOLLY was only 38%.

This confirms that after entering maturity, the monetization efficiency of individual trendy IPs faces marginal decline.

The biggest concern brought by the LABUBU effect is not dependence on a high base, but its role as a “super leverage” that cannot be replicated.

IP is the origin of everything. LABUBU not only contributed to performance but also served as Pop Mart’s core chip for mobilizing top global resources over the past year.

From appearing in Macy’s Thanksgiving Day Parade, to diplomatic collaborations like the “Thailand National Tourism Bureau,” to cross-border collaborations with LVMH’s century-old leather brand MOYNAT, and to content ventures with Sony Pictures, LABUBU has almost carried all of Pop Mart’s narratives about “globalization” and “brand elevation.”

Extreme brilliance has brought extreme panic: how high is LABUBU’s peak, and how large is the risk of retreat? The market remains uncertain: “Where is the cycle’s bottom, and what will break it?” remains blank.

Pessimism thus propagates and continues to spread, leading to concerns and uncertainties about the longer-term—beyond just 2026.

Who will hedge LABUBU?

External expectations fluctuate between optimism and panic, but Pop Mart itself continues to move along its established strategic core.

At the earnings conference, Wang Ning reiterated that Pop Mart’s strategic direction has been consistent since its Hong Kong IPO: globalization and a group centered around IP.

To support this grand narrative, in 2025, Pop Mart underwent its largest organizational restructuring in five years: establishing regional headquarters in Greater China, the Americas, Asia-Pacific, and Europe, with senior vice president Wendeyi also serving as co-COO.

In this structure: Sid manages Greater China and the Americas, Wendeyi oversees Asia-Pacific and Europe.

Just two days before the financial report, Pop Mart completed another key personnel shift: Wendeyi was appointed Chief Growth Officer (CGO), focusing on mid- to long-term strategic and innovation initiatives centered on IP; Sid took charge of the group platform department and fully managed operations across four regions, driving internationalization.

The deeper meaning behind this division of roles is that Pop Mart is trying to resolve the deep contradiction between rapidly growing performance and its relatively lagging organizational system.

Currently, overseas markets outside China account for nearly 45% of performance, with plush toys and figurines approaching equal scale.

As the foundation of globalization and groupization takes shape, the company urgently needs a more efficient “central nervous system” to command this large multinational machine.

But compared to Pop Mart’s own long-term vision, this stage is still just the beginning.

According to a previously circulated internal letter, Pop Mart aims to bring non-consumer goods businesses close to 50%.

To this end, Pop Mart is simultaneously advancing new formats such as theme parks, accessories, desserts, and entertainment, and will launch small home appliances in collaboration with JD.com in April 2026.

The logic behind this is to hedge against the unsustainability of single IP popularity through multi-dimensional consumption scenarios, channels, and content ecosystems, thereby extending IP lifecycle and deepening monetization at individual points.

Compared to the randomness of IP explosions, channel expansion, experience optimization, operational efficiency, and discovering new artists are the real controllable variables for the company.

In the domestic market, Pop Mart’s strategy has shifted from “scale racing” to “stock quality.”

In 2025, only 14 new stores were added, with resources mainly invested in upgrading existing stores and flagship stores.

Management revealed that this year, the number of new store openings and renovations will increase, with the core logic of “stores as parks” to enhance user dwell time and experience. Last year’s practical data confirmed this approach: after increasing store size by 30%-40%, store performance doubled.

Compared to steady domestic adjustments, overseas markets remain the company’s most important growth engine and also the greatest source of uncertainty.

Management stated at the earnings conference that overseas expansion has shifted from a China-headquartered approach to a model where four regional hubs radiate outward, gradually sinking from capital cities to second- and third-tier cities, tourist destinations, and airports.

Supply chain and logistics systems are also being reconstructed, with regional warehousing and transportation resources integrated and negotiated collectively to reduce costs and improve shipping schedules and demand matching.

Recently, Pop Mart established its U.S. headquarters in Calver City, Los Angeles, an area rich in entertainment and creative companies, aiming to attract more artists and content creators to participate in IP development.

Localization is expected to be a key focus this year.

Whether promoting collaborations between local IPs and core proprietary IPs, or developing and commercializing local artists’ IPs, these are viewed as key paths to open regional markets and increase user engagement.

Although overseas markets currently generate high gross margins, increasing uncertainties are directly impacting profits. Data from the earnings report shows that in January-February this year, gross margin has declined by 1 percentage point.

To reduce market uncertainty, management said they will increase information disclosure frequency, including updates on business conditions in May and November outside of semi-annual and annual reports, and will provide profit margin guidance in May.

For Pop Mart in 2026, the company is almost continuously increasing efforts in all “effortable” areas—more asset investment, more complex organizational structures, more diverse business formats—trying to build a long-term growth path that can withstand IP cycles.

But natural traffic decline, margin fluctuations, and costs and geopolitical frictions in globalization remain variables that any consumer IP company cannot fully control.

In the face of business cycles, these factors often determine a company’s short-term upper and lower limits, forming the most sensitive parts of market re-pricing.

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