Pop Mart remains a company with doubled performance figures, yet the market is no longer responding positively. On March 25th, Pop Mart released its latest financial report: revenue reached 37.12 billion yuan, a year-on-year increase of 184.7%; adjusted net profit was 13.08 billion yuan, surging 284.5% year-on-year. Both the gross profit margin of 72.1% and the adjusted net profit margin of 35.2% sit at historically high levels. Objectively, this is a report card that can hardly be called "disappointing," but market expectations for Pop Mart were evidently set much higher. Over the past year, multiple investment banks frequently raised their target prices for the stock, based on core logics such as IP popularity, overseas expansion potential, and category expansion possibilities. When the financial results failed to further strengthen the long-term narrative of a "global IP platform," a stock price correction became almost inevitable.
During the earnings conference, Pop Mart's CEO Wang Ning provided a growth guidance of 20% for 2026, clearly stating that the company would not pursue scale expansion at the expense of profitability. This "prudent" stance, in the eyes of a capital market accustomed to 100% or even 200% growth over the past two years, resembled an emergency brake. However, even before the earnings release, subtle cracks had appeared in market sentiment. From controversies surrounding new IPs, to the continued decline in secondary market premiums, and to the fully stocked shelves of plush toys and figurines in stores, each detail chipped away at investor confidence. Pessimism and panic spiraled after the report's release, ultimately triggering a sharp sell-off—Pop Mart recorded its largest single-day drop and turnover rate in nearly three years.
For Pop Mart, what unsettles the market more than "LABUBU not selling well" are the numerous ripple effects caused by the ongoing withdrawal of traffic and attention. This post-boom adjustment pain has become a tough battle that Pop Mart cannot currently avoid.
Where is the Expectation Gap? Pop Mart's "underperformance" is not essentially a collapse in overall scale, but rather a failure to meet some of the more optimistic expectations. Following the Q3 report, Morgan Stanley had forecasted 26% growth for 2026 and 20% for 2027, figures almost identical to the guidance just disclosed by the company. Some investors analyzed that after a year of significant stock price appreciation, the market's holding structure had become heavily skewed towards "high-expectation capital." Against this backdrop, if a company's fundamentals are merely solid without exceeding expectations, coupled with conservative management guidance, capital naturally opts to take profits, making an exit almost inevitable.
Breaking down the data, the domestic market in the fourth quarter was the core area of weakness. While the Q3 performance announcement indicated domestic growth of 185%-190%, the final domestic growth rate for the entire second half was only 135%, confirming a significant sequential slowdown in Q4.
The performance of the overseas market became one of the most divisive points following the earnings release. Pop Mart's COO Si De stated that North American sales for 2024 were approximately 800 million yuan, and the target for 2025 is 6.8 billion yuan, slightly below the internal expectation of 7 billion yuan mentioned in the interim report. The uniqueness of the North American market lies in its significantly higher online sales proportion, reaching 64%. Management explained this was primarily due to insufficient capacity of offline stores, leading products to be concentrated in online channels.
Against the backdrop of an overall growth slowdown, the often-discussed issue of IP dependency was magnified by the market. Looking at the IP structure, the THE MONSTERS series, which includes LABUBU, experienced a concentrated restocking period in the second half. Its annual revenue reached 14.1 billion yuan, accounting for over 38% of total revenue, up from 34.7% in the first half. Although other IPs showed strengths—second-tier IPs like SKULLPANDA, CRYBABY, MOLLY, and DIMMO each generated over 2.7 billion yuan in revenue, and "Starman" saw revenue skyrocket 16-fold year-on-year to 2 billion yuan within a single year—the sheer scale of LABUBU, already in the tens of billions, sets a high bar. For后备 IPs to match its contribution, the difficulty increases exponentially.
Another noteworthy data point: while Pop Mart's total membership grew significantly by 57.5%, the annual revenue growth rate for MOLLY, once the core IP in earlier years, was only 38%. This indirectly confirms that once a single trendy toy IP reaches maturity, its efficiency in monetizing traffic faces diminishing marginal returns.
The biggest concern stemming from the LABUBU effect is not the singular dependency on a high base, but rather the irreplicability of its role as a "super leverage." IP is the starting point for everything. LABUBU not only contributed significantly to performance but also served as the core bargaining chip for Pop Mart to leverage top-tier global resources over the past year. From appearances in the Macy's Thanksgiving Day Parade, to the diplomatically-tinged "in-depth cooperation with the Tourism Authority of Thailand," to cross-border collaborations with LVMH's century-old leather goods brand MOYNAT, and even content-driven adventures with Sony Pictures, LABUBU has borne almost all of Pop Mart's ambitions regarding "globalization" and "brand elevation." Extreme glory brings extreme anxiety: LABUBU's peak is so high that the market remains uncertain about the magnitude of its potential downturn. Where the bottom of its "cycle" lies, and what might break it, remains an open question. Pessimism derived from this logic continues to spread, fueling concerns and uncertainty about performance further into the future, not just for 2026.
What Will Hedge Against LABUBU? While external expectations often swing between optimism and panic, Pop Mart itself continues to operate according to its established strategic core. During the earnings call, Wang Ning reiterated that the company's strategic direction has remained consistent since its Hong Kong IPO: globalization and IP-centric diversification into a group structure.
To support this grand narrative, in 2025 Pop Mart completed its largest organizational restructuring in five years: establishing regional headquarters for Greater China, the Americas, Asia-Pacific, and Europe, with Group Senior Vice President Wen Deyi concurrently serving as Group Co-COO. In that structure, Si De oversaw Greater China and the Americas, while Wen Deyi was responsible for Asia-Pacific and Europe. Just two days before the earnings release, Pop Mart completed another key personnel shift: Wen Deyi was reassigned as Chief Growth Officer (CGO), focusing on mid-to-long-term strategy and key initiatives for IP-centric group business innovation. Si De now oversees group platform departments and has taken full charge of operational management across all four regions, spearheading the international business push.
The implication behind this division of labor is that Pop Mart is attempting to resolve the underlying矛盾 between its rapidly growing operational scale and its relatively lagging organizational system. Currently, markets outside mainland China account for nearly 45% of Pop Mart's performance, and the scale of plush toys is becoming comparable to that of figurines. As the foundations for globalization and groupification take shape, the company urgently needs a more efficient "central nervous system" to command this vast multinational machinery.
However, compared to the long-term vision set by Pop Mart itself, this stage is merely the beginning. According to a previously circulated internal letter, Pop Mart aims to grow its non-consumer product businesses to nearly 50% of the total. To achieve this, the company is simultaneously advancing various new formats including theme parks, accessories, confectionery, film, and entertainment, and will collaborate with JD.com to launch small household appliances in April 2026. The underlying logic is to hedge against the unsustainable nature of single-IP popularity by creating multi-dimensional consumption scenarios, channel systems, and content ecosystems, thereby extending IP lifecycles and deepening monetization per IP.
Compared to the inherent unpredictability of an IP's breakout success, channel expansion, experience optimization, operational efficiency, and the cultivation of new artists are variables the company can actively control with greater certainty.
In the domestic market, Pop Mart's strategic focus has shifted from "scale racing" to "quality of existing operations." Net store additions for the full year 2025 were only 14, with resources primarily allocated to upgrading existing stores and developing flagship stores. Management indicated that the number of new store openings and renovations will increase this year, with the core logic being to enhance customer dwell time and experience through a "store-as-destination" model. Practical data from last year validates this approach: after increasing the floor area of some stores by 30%-40%, store efficiency achieved doubled growth.
In contrast to the steady adjustments domestically, the overseas market remains the company's most important growth engine, yet also the source of greatest uncertainty. Management stated during the earnings call that overseas expansion has shifted from a China-headquarters-centric approach to a model radiating out from the four regional hubs, gradually penetrating from capital cities to second- and third-tier cities, tourist destinations, and airport locations. The supply chain and logistics systems are also being reconfigured simultaneously, with regional warehousing and transportation resources being integrated for centralized negotiations to reduce costs and improve alignment between shipping schedules and demand.
Recently, Pop Mart established its US headquarters in Culver City, Los Angeles, an area聚集 with numerous creative companies from the film and entertainment industries, hoping to attract more artists and content creators for IP development. Localized operations are expected to be a major focus for Pop Mart this year. Whether it's promoting collaborations between local IPs and core owned IPs, or developing and commercializing IPs based on local artists, both are seen as key paths to penetrate regional markets and enhance user identification.
Although the overseas market currently represents a high-margin segment, increasing uncertainty is directly impacting the profit side. Data disclosed during the earnings call showed the company's gross profit margin had decreased by 1 percentage point in January-February of this year. To reduce market uncertainty, management stated they will increase the frequency of information disclosure, adding business updates in May and November alongside the half-year and annual reports, and will provide profit margin guidance this May.
For Pop Mart in 2026, the company is intensifying efforts in almost every area where it "can make a difference"—heavier asset investment, more complex organizational structures, more diversified business formats—attempting to build a long-term growth path capable of weathering IP cycles. However, the natural ebb of traffic, marginal fluctuations in profit margins, and the costs and geopolitical frictions inherent in globalization remain variables that are difficult for any consumer IP company to fully control. In the face of business cycles, these factors often determine a company's short-term upside and downside, constituting the most sensitive components when the market undertakes a repricing.