Pop Mart Slumps as Collapsing Resale Premiums End ‘Labubu’ Hype Cycle

Pop Mart is facing a critical reassessment of its high-growth narrative as the frenzy surrounding its flagship "Labubu" character cools, triggering a collapse in secondary market premiums and prompting a rapid exit of resellers.

Shares of the Chinese toy maker fell as much as 6.2% on Tuesday, marking the steepest decline in three weeks and ranking among the worst performers in the MSCI Asia Pacific Index. The stock has now plummeted approximately 44% from its peak in August 2025, wiping out more than US$25 billion in market value, as investors react to signs that the scarcity-driven economics fueling the company’s rally are unraveling.

The sell-off was ignited by reports indicating that prices in the secondary market—often a leading indicator of demand—have experienced severe volatility, with some collections now trading below official retail prices. This price inversion has forced "scalpers," who previously hoarded inventory to profit from markups, to pause their accumulation, effectively removing a significant layer of artificial demand.

Market sentiment has shifted sharply as investors question whether the company can sustain its valuation. The core concern is whether the "Labubu" intellectual property represents a durable asset capable of long-term monetization, or a short-lived trend similar to historical fast-fashion fads.

Resale Premiums Evaporate

The secondary market, serving as an early warning system for collectibles, is flashing red. Data from the toy trading platform Qian Dao indicates that average prices for the "Have a Seat" series and full Labubu sets have fallen below their official retail price tags.

This trend extends to international markets. On the U.S. resale platform StockX, while Labubu remains a dominant category, the pricing power has significantly diminished. The "Have a Seat" series, which previously commanded prices near US400,isnowtradingaroundUS400,isnowtradingaroundUS110, well below its US$168 retail price. Premiums for rare editions have also shrunk drastically from their highs recorded in June.

The disappearance of arbitrage profits has triggered a withdrawal of resellers, further dampening sentiment. Jeff Zhang, an analyst at Morningstar, noted that investors appear to be rotating out of China’s "new consumption" sector to lock in profits. This shift also impacted peer companies, with Laopu Gold and Mixue seeing share price declines on Tuesday.

Slowing Growth and Rising Short Bets

Beyond the resale market, data suggests a broader cooling of momentum in Pop Mart's expansion efforts. According to YipitData, revenue growth in North America slowed to 424% in the quarter ending December 6, a rate half that of the three months ending in September. Despite aggressive marketing campaigns, including a presence at the Macy’s Thanksgiving Day Parade, Google search interest for the brand has steadily declined since peaking in the summer.

The combination of lackluster "Black Friday" performance in the U.S. and cooling resale demand has drawn comparisons to the 1990s "Beanie Babies" bubble, challenging the narrative that Pop Mart could evolve into a Chinese equivalent of Disney or Sanrio.

Skeptics are increasing their positions. Data from S&P Global shows that short interest in the stock has tripled since November, reaching its highest level since August 2023. Richard Lin, Chief Consumer Analyst at SPDB International, highlighted the risk of high base effects, questioning the company's ability to maintain high year-over-year growth rates heading into next year.

Valuation Debates and Diversification

Institutional investors remain divided on the stock's outlook. Kevin Net, head of Asian equities at Financiere de L’Echiquier, stated that market sentiment has turned clearly negative, citing limited visibility on future earnings per share despite reasonable valuations. Similarly, Daisy Li, a fund manager at EFG Asset Management, noted the difficulty in modeling the company due to the discretionary nature of its products.

However, sell-side analysts retain a degree of optimism, with an average 12-month price target approximately 84% above the latest close. Morgan Stanley analysts, including Dustin Wei, argued in a report that the current sell-off is "excessively preemptive," suggesting the market is overlooking the long-term expansion of the company’s recurring customer base.

To mitigate the risks associated with reliance on a single IP, Pop Mart is attempting to diversify its portfolio by promoting other characters such as Crybaby and Hirono. The company is also expanding into broader entertainment sectors, including theme parks in Beijing and a movie development deal with Sony Pictures. Despite these efforts, Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management, warned that if Labubu sales decline, other characters may not have sufficient momentum to fill the revenue gap.

Read More: What happened to Labubu — and why Pop Mart’s boom turned into a bust