POP MART shares plunged on Thursday. This indicates that although the company had a strong performance in the third quarter, there are still new concerns about the long-term sales prospects of this toy manufacturer.

The Hong Kong-listed stock dropped nearly 11%, the most since April. This decline reversed the 2.4% gain seen on Wednesday. Previously, the manufacturer of the popular "Labubu" dolls reported that its annual revenue had increased by as much as 250% in the three months ending in September.

Pop Mart’s shares have lost steam in recent months and are currently down about 30% since a late-August peak, hurt by profit-taking and concerns that frenzied demand for its products is unlikely to sustain. The Beijing-based firm has emerged as the hottest Chinese consumer stock over the past year, riding on a wave of demand for its toothy plush toys that have become a global craze.

“We think its third-quarter revenue growth topped market consensus, but investors may be more concerned about the likely deceleration in the coming quarters,” said Jeff Zhang, an analyst at Morningstar Inc. “We also expect Pop Mart’s top line growth to peak in 2025, before a slowdown from 2026 onwards.”

The average transaction price of second-hand mini Labubu series at Qiandao, a Chinese reselling and trading platform focused on pop toys, dropped 27% over the past 30 days to 1,149 yuan ($161.29) for a 14-set box as of late Thursday morning local time, almost erasing the premium over its official retail price of 1,106 yuan.

The premium is an important metric used by some investors to gauge demand for Pop Mart’s sales driver, while analysts have also pointed to the possibility of increased supply causing the price decline.

Traders have been increasing their bearish bets on this stock. According to data from S&P Global, as of Tuesday, the proportion of short selling transactions (the percentage of stocks available for public trading that have been sold short) for this stock had risen to 1.4%, compared to only 0.2% at the beginning of September.

The stock options trading of Pop Mart launched last week was very active. On Thursday, the number of traded option contracts exceeded 28,500, of which approximately 16,000 were put options and 12,500 were call options. The value of call options decreased while that of put options increased, indicating an increase in the market demand for put options.