The cooling frenzy over Labubu dolls has brought one of the world’s biggest stock rallies to a halt, erasing billions of dollars from the value of Pop Mart International Group Ltd.
The Chinese toymaker’s stock slumped nearly 9 percent in Hong Kong, the most since April, after JPMorgan Chase & Co. downgraded the firm due to weak catalysts and an unattractive valuation. Despite the slide, Pop Mart is still up more than 180 percent year-to-date and remains the top performer on the Hang Seng Index.
“We believe the valuation is priced for perfection and any small fundamental miss/negative media reports (i.e. resale price drop and third-party licensing) might drive underperformance,” JPMorgan analysts including Kevin Yin wrote in a note.
The Wall Street bank’s downgrade comes amid signs that the hype surrounding Pop Mart’s designer toys is fading. The premium once commanded by Labubus — the firm’s rabbit-eared plush dolls sought by celebrities from BlackPink’s Lisa to David Beckham — is narrowing in secondary markets in China.
Pop Mart’s stock too is witnessing a sharp draw-down, having lost almost $13 billion — or roughly a quarter of its value — since reaching a record on Aug. 26. It more than quadrupled in 2024 as Labubu sparked a craze across many Asian markets, and was added to the Hang Seng Index and the Hang Seng China Enterprises Index this month. Pop Mart’s shares are trading at nearly 23 times their 12-month forward earnings estimate.
Pop Mart is planning to release animation and a new version of Labubu before Christmas and is also seeking to launch interactive toys, JPMorgan analysts noted. Those catalysts, however, have “low visibility,” the analysts said. They downgraded the stock to neutral from overweight, lowering their December 2026 price target by 25 percent to HK$300.
Overall, the ratio of buy ratings to total recommendations on the stock has dropped to 91 percent, the lowest level in a year, according to data compiled by Bloomberg.
By Jeanny Yu
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