Shares of Pop Mart International Group dropped over 22% following the release of its annual results, as investor concerns about the sustainability of Labubu-driven growth outweighed the company's strong financial performance [1]. The Beijing-based toy maker reported annual revenue of 37.1 billion yuan ($5.4 billion) for 2025, marking a 185% increase from the previous year, though this figure was just shy of LSEG estimates of 38 billion yuan [1]. Net income more than quadrupled to 12.8 billion yuan, slightly exceeding the forecast of 12.6 billion yuan [1].
Despite these resilient headline numbers, a material slowdown in the fourth quarter heightened investor worries about the durability of Pop Mart's top intellectual property (IP), Labubu. Jeff Zhang, an equity analyst at Morningstar, noted that the reduction in dividend payout ratio to 25% in 2025 from 35% in the prior year was also viewed negatively by investors [1]. Labubu, the company's flagship monster doll, continued to be the primary growth engine, contributing 38% to total annual revenue compared to 23% in 2024 [1]. Sales from other IPs such as Skullpanda more than doubled to 3.54 billion yuan, while Crybaby and Dimoo each roughly tripled. However, newer characters like Twinkle Twinkle and Hirono generated substantially lower sales, at 2.06 billion yuan and 1.74 billion yuan respectively, compared to The Monster family sales of 14.2 billion yuan [1].
Billy Leung, analyst at Global X ETF, highlighted the ongoing debate among investors, with bulls focusing on continued IP monetization and overseas growth, while bears questioned the durability and cycle risk of Pop Mart's business. He stated that the earnings report did little to resolve this divide [1]. CEO Wang Ning attempted to reassure the market during the earnings call, emphasizing that Pop Mart has more than just Labubu and likening the company's situation to a "rookie racing driver suddenly thrown onto an F1 circuit" [1].
The sell-off also reflected a prolonged period of cautious sentiment since last year, according to Shaun Rein, managing director at China Market Research Group. Investors who had accumulated short positions over the past six months unwound those positions on Tuesday, contributing to the sharp decline in share price [1]. Pop Mart shares have lost momentum after their extended rally, retreating about 50% from their August peak, despite having gained more than 340% in 2024 and nearly 110% last year [1].
CONCLUSION
Pop Mart's sharp share price decline underscores investor anxiety about the sustainability of its Labubu-driven growth, despite robust headline financial results. The market remains divided on the company's future prospects, with concerns about IP durability and cycle risk dominating sentiment. The sell-off signals a high-impact event, reflecting both profit-taking and persistent skepticism about Pop Mart's ability to replicate past successes.