By Tracy Qu

Pop Mart International shares slumped Monday by the most in five months as investors took profits amid signs that demand for its popular Labubu dolls is waning.

The stock fell as much as 9% in Hong Kong before paring losses to close 6.4% lower at HK$259.00. Despite the pullback, shares of the Beijing-based toymaker remain up 190% this year, making it one of Hong Kong's top-performing stocks in 2025.

"We think the rout today reflects profit taking activities of investors and potential downbeat outlook on the demand for Pop Mart's products," said Jeff Zhang, analyst at Morningstar.

The decline followed reports that JPMorgan had downgraded the stock, citing stretched valuations and limited catalysts.

Labubu, an "ugly-cute" goblin-like character that has become a social-media sensation, has been the main driver of Pop Mart's success. The figurines are sold in "blind boxes," which hide the contents to add an element of surprise.

Fans queue outside Pop Mart stores, and some dolls fetch multiples of their retail price on resale platforms.

But analysts say the craze may be losing steam.

"As the secondary-market prices for Labubu and other IPs have been declining recently, we think demand for some previous series may have cooled," Morningstar's Zhang added.

While Pop Mart is still on track to post record earnings in 2025, Morningstar expects growth to slow next year due to a high base effect and intensifying competition.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

September 15, 2025 05:08 ET (09:08 GMT)

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