Pop Mart shares slide on demand worries, profit taking

Pop Mart International Group’s Hong Kong shares dropped as much as 8.9% on September 8, marking their largest fall in five months.

The Chinese toy maker, known for its Labubu dolls, joined the Hang Seng Index and the Hang Seng China Enterprises Index the same day.

Market concerns have grown after the late August launch of a new mini Labubu doll, as demand in the secondary market appeared to weaken.

Morningstar analyst Jeff Zhang cited both declining resale prices due to restocking and reports of lower demand for some product lines.

Some investors also sold shares to take profits after gains ahead of the index inclusion.

Jeff Zhang also pointed to negative feedback about new product quality, saying this is an issue the company needs to address.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Pop Mart’s quality issues extend far beyond isolated incidents, with the company earning just 1.3 out of 5 stars on Trustpilot, where 90% of reviews are negative1.
Specific complaints about Labubu toys include “mismatched limbs and visible seams” despite their premium 99 yuan price point, creating a significant gap between cost and quality expectations2.
This quality crisis has drawn attention from state media, increasing regulatory pressure on Pop Mart to address manufacturing standards2.

Despite being the market leader, Pop Mart holds only 8.5% of China’s trendy toy market, which reached 72.7 billion yuan in 2024 with 26% growth3.
The top five companies collectively control less than 25% of the market, indicating a highly fragmented competitive landscape with room for new entrants3.
The broader blind box market is projected to surpass 58 billion yuan by 2025, but faces challenges including “product saturation and calls for sustainability”4.
This market structure suggests that Pop Mart’s current difficulties could create opportunities for competitors to capture market share, particularly if they can address quality and sustainability concerns more effectively.