Pop Mart is facing its biggest test yet as Labubu’s explosive growth begins to slow.

Pop Mart’s Labubu Problem: Is the Stock Crash a Warning or a Reset?

Pop Culture by Julian Vane

Pop Mart turned Labubu into one of the strangest consumer success stories of the decade. The grinning, sharp-toothed character escaped the collectible-toy niche, invaded TikTok feeds, handbags, resale platforms and celebrity culture, and helped transform a Chinese blind-box company into a global consumer phenomenon.

Now the market is asking an uncomfortable question: what happens to Pop Mart when the Labubu hype stops accelerating?

The answer matters because the stock has already undergone a brutal repricing. Hong Kong-listed Pop Mart International Group, ticker 9992.HK, traded around HK$150 in mid-August 2026 after reaching a 52-week high above HK$337. Its market capitalization had fallen by more than 40% over the previous year, while the stock was down roughly 20% in 2026.

The company itself is hardly collapsing. Revenue is still growing, margins remain unusually high for a toy business and Pop Mart owns several increasingly valuable characters. But the first half of 2026 exposed the difference between a company that is still growing and a stock that had been priced for almost unstoppable growth.

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Labubu built the Pop Mart boom

To understand the selloff, you first have to understand how extraordinary Pop Mart’s previous growth had become.

According to the company’s 2025 annual results filed with the Hong Kong Stock Exchange, revenue jumped 184.7% year over year to RMB37.12 billion. Profit attributable to shareholders climbed 308.8% to RMB12.78 billion.

Those are spectacular numbers.

The problem is that an enormous part of the acceleration came from The Monsters, the intellectual-property family containing Labubu.

Revenue from The Monsters reached RMB14.16 billion in 2025, up 365.7% year over year. The franchise represented 38.1% of total company revenue, compared with 23.3% in 2024.

In other words, Pop Mart was not merely benefiting from Labubu. Its growth profile was increasingly being reshaped by it.

That helped investors justify an enormous valuation while the character was going viral internationally. But concentration works in both directions. When growth becomes dependent on one blockbuster franchise, any hint that the blockbuster is cooling can trigger a disproportionate reaction in the stock.

Why Pop Mart stock collapsed

The market started questioning that growth story aggressively in March 2026.

Despite Pop Mart reporting its enormous 2025 revenue and profit increases, the stock fell around 23% after the annual results. Investors focused less on what had already happened and more on what appeared to be coming next.

Reuters reported that analysts were concerned about a material slowdown during the fourth quarter of 2025, while the company’s dividend payout ratio had fallen to 25% from 35% a year earlier.

That combination mattered.

Pop Mart had spent much of its rally being valued as an explosive global growth company. Once growth began slowing, strong absolute profits were no longer enough. The market had to reconsider how much it was willing to pay for those profits.

By August 19, 2026, Pop Mart was trading near HK$150.50, compared with a 52-week high of roughly HK$337. Its market capitalization stood around HK$200 billion.

The valuation compression has therefore been almost as important as the operational slowdown itself. Investors have gone from asking how big Labubu could become to asking how much of the boom was temporary.

The 2026 slowdown changed the story

Pop Mart’s first-half 2026 numbers made the deceleration impossible to ignore.

The company reported RMB17.17 billion in revenue for the first six months of 2026, up 23.8% year over year. Adjusted net profit reached RMB5.16 billion, while adjusted net margin remained a formidable 30%.

For most consumer companies, 24% revenue growth would be excellent.

For Pop Mart, it was a shock.

The comparable period a year earlier had delivered roughly threefold revenue growth, and the first-half result missed the growth rate analysts had expected. CEO Wang Ning also indicated that the company would probably fail to reach its previous target of at least 20% revenue growth for the full year.

International performance was particularly worrying. Overseas revenue fell around 11% year over year, according to reporting following the results.

This is the core of the Pop Mart stock debate in 2026: the business has not stopped growing, but the growth algorithm has changed dramatically.

A company priced for hypergrowth does not necessarily need declining revenue to suffer a major stock correction. It simply needs reality to come in below the expectations embedded in its valuation.

Pop Mart’s real problem: Labubu concentration

Labubu remains commercially powerful.

But The Monsters generated RMB4.45 billion in revenue during the first half of 2026 and accounted for around 26% of total sales, down from 34.7% in the comparable period.

That decline can be interpreted in two very different ways.

The bearish reading is obvious: Pop Mart’s most important global franchise is losing momentum, validating fears that the collectible craze was driven partly by scarcity, social-media virality and speculative resale demand rather than durable consumer loyalty.

There are historical echoes here. Collectible markets have repeatedly produced explosive cycles in which scarcity creates higher resale prices, those prices attract new buyers, and new buyers create even more scarcity. When the feedback loop breaks, demand can normalize far faster than traditional consumer-brand models would suggest.

The Beanie Babies comparison frequently attached to Labubu is imperfect. Pop Mart controls a broader ecosystem, multiple intellectual properties, physical stores, licensing opportunities and entertainment ambitions that Ty did not possess in comparable form.

But the analogy captures a real risk: collectibles become dangerous when customers start buying primarily because everybody else wants them.

Secondary-market cooling therefore matters even if Pop Mart does not directly profit from every resale transaction. Falling resale premiums reduce the sense of scarcity and financial upside that can fuel collector demand.

The diversification machine is starting to work

This is where the bearish narrative becomes less straightforward.

Pop Mart is no longer entirely a Labubu company.

Its first-half 2026 results showed that six intellectual properties generated more than RMB1 billion each: The Monsters, Twinkle Twinkle, Crybaby, Dimoo, Skullpanda and Hirono.

The standout was Twinkle Twinkle, which generated RMB2.65 billion and grew 580.6% year over year. It represented roughly 15% of group revenue.

That is significant because the central question facing Pop Mart is not whether Labubu can remain permanently viral. Almost no character can.

The more important question is whether Pop Mart has developed a repeatable system for creating, acquiring and scaling characters.

If Twinkle Twinkle, Crybaby, Skullpanda, Molly and other franchises can collectively compensate for a mature Labubu cycle, then the company starts looking less like a one-hit collectible phenomenon and more like an intellectual-property platform.

The comparison Pop Mart itself increasingly appears to want is not Beanie Babies but Disney: characters that begin as products and eventually extend into entertainment, experiences, licensing, food, fashion and physical destinations.

That transition is far from proven, but it is already visible.

International expansion is both opportunity and risk

Pop Mart continues to push aggressively beyond China.

At the end of the first half of 2026, the company operated 676 physical stores and 2,827 Roboshops globally. It has expanded manufacturing capacity internationally and continued opening locations outside its home market.

The company is also trying to stretch its characters beyond shelves full of blind boxes.

Sony Pictures is developing a Labubu movie project, while Pop Mart has expanded its Pop Land theme-park concept in Beijing. In July 2026, the company also opened its first international bakery in Singapore, turning characters including Labubu and Molly into branded food experiences.

The strategy is clear: make Pop Mart characters exist everywhere.

A successful transition would be enormously valuable. Entertainment franchises tend to become more defensible when consumers interact with them across multiple formats rather than simply buying one category of merchandise.

But international expansion creates costs before it necessarily creates durable demand.

More stores, manufacturing locations, content investments and experiential concepts all require capital and management attention. If underlying collectible demand keeps slowing, Pop Mart could end up expanding infrastructure just as the viral wave that justified it recedes.

International growth is therefore both the company’s biggest opportunity and one of its largest execution risks.

The RMB5 billion buyback sends a message

After its first-half results, Pop Mart announced plans to repurchase between RMB2 billion and RMB5 billion of its own shares over six months.

That is not a trivial announcement.

Share buybacks can support earnings per share by reducing the number of shares outstanding, but the more important signal is psychological: management is effectively telling investors that it considers the current valuation attractive enough to deploy significant capital into the stock.

It also highlights how dramatically Pop Mart’s valuation has compressed.

Around HK$150 per share, the company’s trailing price-to-earnings multiple had fallen into the mid-teens by August 2026, a radically different setup from the premium valuation investors were willing to assign during peak Labubu mania.

That does not automatically make the shares cheap. Earnings themselves could decline if margins or revenue deteriorate further.

But the valuation now requires investors to answer a different question.

At the top, investors needed Labubu to stay extraordinary.

After the collapse, they may only need Pop Mart to remain a good business.

The bull case for Pop Mart

The optimistic argument begins with an important distinction: slowing growth is not the same thing as a broken company.

Pop Mart still generated 23.8% revenue growth in the first half of 2026. Its adjusted net margin remained around 30%. It has hundreds of stores, an expanding international footprint and several billion-yuan intellectual properties.

Twinkle Twinkle’s 580.6% growth is particularly important because it demonstrates that consumer attention can move from one Pop Mart universe to another.

If the company can repeatedly create new franchises, its enormous retail and distribution network becomes a competitive advantage. A successful new character can be pushed almost instantly through stores, vending machines, e-commerce, plush products, accessories and collaborations.

The international opportunity also remains large. Pop Mart has already accomplished something difficult for a Chinese consumer company: creating characters recognizable well outside China.

Labubu does not necessarily have to grow forever for that achievement to retain value.

The Sony project, Pop Land, international retail expansion and experiments such as branded bakeries indicate that management is attempting to turn viral characters into long-lived entertainment assets.

If that works, the 2026 selloff could eventually resemble a classic post-hype valuation reset rather than the beginning of a permanent decline.

The bear case for Pop Mart

The pessimistic argument is that Pop Mart’s economics have benefited from conditions that may be impossible to reproduce consistently.

Blind boxes combine several unusually powerful consumer mechanisms: randomness, collectibility, artificial scarcity, social-media visibility and completion psychology.

Add a viral character and a booming secondary market, and demand can become extremely reflexive.

But reflexive demand is notoriously unstable.

Labubu’s extraordinary success may have pulled purchases forward, attracting consumers who wanted the cultural moment rather than developing a lasting relationship with the brand. Once scarcity decreases and resale prices cool, those customers may disappear.

Competition is another problem. The designer-toy and collectible market is crowded, and every successful format invites imitation.

Pop Mart also cannot assume that each new IP will become another Labubu. Twinkle Twinkle’s current trajectory is encouraging, but converting several characters into sustainable global franchises is much harder than producing a series of successful product launches.

Finally, expansion into movies, theme parks, restaurants, appliances and other categories introduces execution risk. Disney-like ambitions sound attractive precisely because Disney’s model is so difficult to replicate.

Pop Mart could diversify successfully.

It could also discover that a wildly successful toy company is not automatically an entertainment empire.

Structural collapse or post-hype reset?

The evidence currently points more toward a violent post-hype reset than a confirmed structural collapse.

Pop Mart’s stock deserved to lose some of the expectations attached to peak Labubu mania. Revenue growth has decelerated sharply, overseas sales have weakened and management itself is warning that its previous 2026 target may not be reached.

Those are not minor problems.

But describing the business itself as collapsing goes too far.

Revenue still rose almost 24% during the first half. Adjusted profitability remains exceptionally strong. Six IP franchises have crossed the RMB1 billion mark, and Twinkle Twinkle’s rapid growth provides the first meaningful evidence that Pop Mart may be able to reduce its dependence on Labubu.

The distinction between the stock and the company is crucial.

Pop Mart the stock collapsed because expectations collapsed.

Pop Mart the business is now entering a much more interesting test: proving that its competitive advantage is not Labubu itself, but the machine that created and monetized Labubu.

If management can turn that machine into a repeatable IP factory, today’s lower valuation could eventually look excessive.

If Labubu proves to have been an exceptional accident that cannot be replicated, the market may still be too optimistic.

That makes the next several quarters less about whether consumers continue buying fuzzy monsters and more about whether Pop Mart can graduate from viral toy maker to durable global entertainment company.

Pop Mart stock and Labubu: key questions

Why has Pop Mart stock fallen so much?
The stock has fallen because revenue growth slowed sharply after an extraordinary Labubu-driven boom, while overseas sales weakened and investors questioned whether the company could sustain its previous growth rate.

How important is Labubu to Pop Mart?
Labubu belongs to The Monsters franchise, which generated RMB14.16 billion and 38.1% of Pop Mart’s 2025 revenue. Its share fell to about 26% in the first half of 2026.

Is Pop Mart still growing in 2026?
Yes. First-half 2026 revenue increased 23.8% year over year to RMB17.17 billion, although that represented a dramatic slowdown from the previous year’s hypergrowth.

What is Twinkle Twinkle?
Twinkle Twinkle is another Pop Mart intellectual property. Its revenue reached RMB2.65 billion in the first half of 2026, up 580.6% year over year, making it an important test of Pop Mart’s ability to diversify beyond Labubu.

How much stock is Pop Mart planning to buy back?
Management announced plans to repurchase between RMB2 billion and RMB5 billion of Pop Mart shares over a six-month period.

Could Pop Mart become another Disney?
Pop Mart is expanding its IP into movies, theme parks, food, licensing and other experiences, but building a diversified entertainment ecosystem comparable with Disney would require years of successful execution.

Is Pop Mart stock a good investment?
That depends on assumptions about future growth, margins and the durability of Pop Mart’s IP portfolio. The lower valuation reduces some expectations, but slowing demand and dependence on hit characters remain significant risks.

Is this article financial advice?
No. This article is for informational and editorial purposes only and should not be considered investment, trading or financial advice.