By Pop Mart’s latest earnings have triggered a reassessment of its valuation, as investors focus less on headline growth and more on the company’s reliance on a single character.
Shares of the Beijing-based toymaker fell more than a fifth on Wednesday, even as it reported strong results.
The reaction points to concerns about whether the company can sustain momentum driven largely by Labubu, a collectable plush toy that has fuelled its expansion.
With growth slowing in the final quarter and newer characters yet to match its scale, doubts around demand are starting to weigh on sentiment.
Strong results fail to lift sentiment
Pop Mart reported annual revenue of 37.1 billion yuan (around $5.4 billion) for 2025, marking a 185% increase from the previous year.
The figure came slightly below LSEG estimates of 38 billion yuan.
Net income climbed to 12.8 billion yuan, more than four times higher year-on-year and above forecasts of 12.6 billion yuan.
Despite these numbers, the market response remained negative.
Investors also reacted to a reduction in the dividend payout ratio to 25% from 35% in the prior year.
Labubu drives revenue concentration
The company’s revenue mix highlights its dependence on Labubu.
The Monsters, an intellectual property family that includes the Labubu character, accounted for 38% of total revenue in 2025, up from 23% a year earlier.
While other product lines have grown, they remain smaller contributors.
Skullpanda sales more than doubled to 3.54 billion yuan, while Crybaby and Dimoo each roughly tripled.
Newer characters such as Twinkle Twinkle and Hirono generated 2.06 billion yuan and 1.74 billion yuan, respectively.
However, these figures remain below the contribution from the Monsters franchise, which delivered 14.2 billion yuan.
The concentration of revenue in a single franchise has raised questions about whether Pop Mart can replicate the success of Labubu across its broader portfolio.
Investors split on growth durability
The earnings report has reinforced a divide among investors.
Some continue to focus on the company’s ability to monetise intellectual property and expand overseas.
Others are more cautious, pointing to risks tied to product cycles and shifting consumer preferences.
The latest results have not resolved these concerns.
The slowdown in late-year performance has strengthened the view that demand linked to a single character may not be sustainable.
During the earnings call, CEO Wang Ning emphasised that the company’s portfolio extends beyond Labubu and highlighted the development of new characters.
However, the market response suggests that investors remain unconvinced.
Rally fades as sentiment weakens
Pop Mart’s recent decline follows a period of gains that had driven its valuation higher.
The stock has retreated about 50% from its August peak after rising more than 340% in 2024 and nearly 110% last year.
The sell-off also reflects a broader shift in sentiment that has been building over recent months.
Investors who had taken short positions, anticipating a pullback in the stock, began unwinding those trades earlier this week, adding to volatility.
As momentum fades, the focus has shifted from expansion to the durability of demand and the company’s ability to build multiple franchises.
For now, Labubu remains central to the story, and that concentration is shaping how investors assess Pop Mart’s valuation.
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