Pop Mart's 40% stock rout shows growing Labubu crash worry

Labubu mania appears to be ebbing as quickly as it surged, driving a roughly 40 per cent rout for former market darling Pop Mart International Group that is raising questions over the company's long-term prospects.

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A disappointing US Black Friday and cooling resale demand have revived comparisons to the 1990s Beanie Babies bust, challenging the notion that Pop Mart could become China's answer to Walt Disney Company or Hello Kitty owner Sanrio.

Pop Mart's North America revenue growth slowed to 424 per cent in the current quarter to Dec 6 - more than halving from the three months to September - according to YipitData, a New York-based firm that gathers and analyses alternative data. Bearish wagers against its stock have tripled since November to their highest since August 2023, S&P Global data shows.

"The market is very focused on Pop Mart's short-term numbers," said Mr Richard Lin, chief consumer analyst at SPDB International Holdings. "The biggest question is if it can't sustain a very high year-on-year growth rate towards year end, then can it still deliver growth next year with such a high base?"

Investors' growing scepticism has turned the Chinese pop toy maker into one of Hong Kong's worst performers. The core concern is whether the sharp-fanged creature behind Pop Mart's 3,200 per cent rally from 2022 lows is a durable long-term character, or a fashion trend whose shelf life is already expiring.