Pop Mart's "A Song of Ice and Fire": Performance Tops the Charts and a Hundred Billion Market Cap Vanishes—What Is the Market Really Afraid Of?

In the final week of March, Chinese trendy toy giant Pop Mart experienced an unprecedented “split personality.”

On March 25th, the company delivered a record-breaking “strongest annual report in history”: full-year revenue of 37.12 billion yuan, a staggering 184.7% year-over-year increase; adjusted net profit of 13.08 billion yuan, soaring 284.5%. In an environment where consumer sectors are generally under pressure, such growth is almost mythical.

However, the reaction from the capital market was like encountering a cold wave. For three consecutive trading days after the earnings release, Pop Mart’s stock price fell by over 30%, with a market value evaporating nearly HKD 17k. Even the company’s urgent buyback plan of nearly HKD 900 million couldn’t stop the selling frenzy.

This is a typical “good news is bad news” capital game, but more like a “stress test” of the company’s future growth logic. When the engine of high growth is still roaring, why did the market choose to get off early? Behind this explosive financial report, what deep-seated concerns are hidden?

Expectations Gap:

When an “F1 Racer” Voluntarily Enters the Pit Stop

Market trading is never about the past, but about the future.

For investors in Pop Mart, the brilliant performance in 2025 has long been expected and even fully priced in. What truly triggered the stock price shock was management’s outlook for 2026.

At the earnings conference, Pop Mart founder Wang Ning compared 2025 to “a rookie racer being pulled into an F1 race,” and for 2026, his keyword was “rest.” He clearly stated that the growth guidance for 2026 is “to strive for no less than 20% growth,” emphasizing that they will not pursue aggressive revenue growth at the expense of profit.

From a 184% surge to a 20% guidance, this huge gap signals to the capital market: the story of rapid growth may have already come to an end. Morningstar analyst Jeff Zhang bluntly said, “The market’s long-term valuation of Pop Mart implicitly assumes a ‘continuously exceeding expectations’ narrative. A 20% growth rate isn’t low in the consumer sector, but for Pop Mart, it’s a significant downward revision of expectations.”

Although some close to Pop Mart argue that the company’s growth guidance has always been conservative (e.g., expecting 30% final growth in 2024, reaching 107%), this time, the market seems unwilling to bet on the “superior expectations” behind the “conservative” stance. In a context where stock prices have already priced in high growth expectations, any signals of slowdown will be infinitely magnified by sensitive nerves.

LABUBU Dependency Syndrome

If the conservative guidance is the fuse for the stock decline, then concerns over over-reliance on a single IP are the Damocles sword hanging over Pop Mart.

In 2025, LABUBU was undoubtedly the top trending IP in the global trendy toy scene. Its “THE MONSTERS” IP generated revenue of 14.16 billion yuan, up 365.7% year-over-year, accounting for 38.1% of total revenue, up from 23.3% in 2024. This means more than one-third of the company’s income depends on this one IP.

What worries the market even more is that even the most optimistic investment banks do not believe LABUBU can sustain its explosive growth in 2025. Morgan Stanley predicts that LABUBU’s growth will significantly slow down in 2026, with their optimistic expectations largely based on whether other “non-LABUBU” series IPs can take over.

Although Wang Ning responded at the earnings conference that “even if we remove all LABUBU-related performance, Pop Mart still achieves rapid growth,” the data does not fully support this claim. As LABUBU shifts from a trend to a lifestyle, its peak commercial phase may have passed, and the task of finding the next billion-yuan IP becomes increasingly urgent.

From “Good News Selling” to “Unlocking the Floodgates of Lock-up Expiry”

Pop Mart’s experience is not an isolated case. Just days earlier, Kuaishou also saw a sharp decline after releasing impressive annual results. This reflects a brutal survival rule in the current Hong Kong stock market.

“Under the current liquidity environment in Hong Kong stocks, earnings season is the best window for selling,” a market insider said. “Usually, trading volume is too small to sell off, but after earnings are announced, attention peaks, liquidity is best. If you don’t sell now, when will you?”

On March 26th, Pop Mart’s trading volume was about HKD 4 billion, with buybacks accounting for only around 15%—the remaining 85% of the trading volume was likely institutional profit-taking using the liquidity provided by buybacks as an “escape route.”

A bigger macro pressure comes from the “lock-up flood” facing the Hong Kong stock market in 2026. According to Wind data, the total market value of restricted shares set to unlock in 2026 is about HKD 1.7 trillion, nearly tripling compared to 2025. When the unlocking tide hits a liquidity-starved market, even small sell-offs can trigger a sharp plunge. Pop Mart’s plunge, to some extent, is a reflection of this structural market pressure.

Can Small Appliances Support a Second Growth Curve?

To diversify risks and open new growth avenues, Pop Mart is accelerating an “IP ecosystem” experiment. At the earnings conference, Wang Ning revealed that the company will launch IP-centered small home appliances in April, including electric kettles, coffee machines, electric toothbrushes, etc., in cooperation with Xinbao Co., using OEM manufacturing. This is part of the company’s “IP-centered group strategy,” aiming to extend IP from toys to lifestyle products.

However, market reactions to this strategy are quite mixed. An insider close to Pop Mart said that the small appliance business “won’t have a significant impact on performance growth, and internal expectations are not high.” Consumer attitudes are also divided: some are willing to pay for theme parks and movies, but believe “professionals should do professional things,” and remain cautious about small appliances.

Some industry experts offer a more optimistic view, believing that the small appliance market aligns well with Pop Mart’s Generation Z user profile, and that OEM mode can help it quickly penetrate, pushing the industry from functional competition to IP value innovation.

But regardless, whether it’s theme parks, accessories, desserts, or small appliances, these new businesses are still in the “careful nurturing” stage. It will take a long journey before they can become a second growth curve capable of offsetting LABUBU’s cycle fluctuations.

Source: Chunhua Finance

Disclaimer: This article is for informational sharing only and does not constitute any investment advice. Anyone making investment decisions based on this content bears the risk themselves.