The cooling frenzy over Labubu dolls has introduced one of many world’s greatest inventory rallies to a halt, erasing billions of {dollars} from the worth of Pop Mart International Group Ltd.
The Chinese toymaker’s inventory slumped almost 9 % in Hong Kong, probably the most since April, after JPMorgan Chase & Co. downgraded the agency attributable to weak catalysts and an unattractive valuation. Despite the slide, Pop Mart remains to be up greater than 180 % year-to-date and stays the highest 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 together with Kevin Yin wrote in a be aware.
The Wall Street financial institution’s downgrade comes amid indicators that the hype surrounding Pop Mart’s designer toys is fading. The premium as soon as commanded by Labubus — the agency’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 inventory too is witnessing a pointy draw-down, having misplaced nearly $13 billion — or roughly 1 / 4 of its worth — since reaching a report on Aug. 26. It greater than quadrupled in 2024 as Labubu sparked a craze throughout 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 buying and selling at almost 23 instances their 12-month ahead earnings estimate.
Pop Mart is planning to launch animation and a brand new model of Labubu earlier than Christmas and can also be in search of to launch interactive toys, JPMorgan analysts famous. Those catalysts, nonetheless, have “low visibility,” the analysts stated. They downgraded the inventory to impartial from chubby, reducing their December 2026 worth goal by 25 % to HK$300.
Overall, the ratio of purchase rankings to whole suggestions on the inventory has dropped to 91 %, the bottom degree in a yr, in line with knowledge compiled by Bloomberg.
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The Rise of ‘Ugly-Cute’ Labubu Dolls, in Four Charts
The craze over Pop Mart’s toys speaks to a need for escapism and customisation throughout more and more unsure financial instances — however the dolls’ reputation could also be fleeting.