After doubling its performance, Pop Mart slammed on the brakes, bidding farewell to the era of "blockbuster leverage."

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Pop Mart is still the same company doubling its performance, only now the market is no longer buying it.

On March 25, Pop Mart released its latest financial report: revenue of 37.12 billion yuan, up 184.7% year-on-year; adjusted net profit of 13.08 billion yuan, up 284.5% year-on-year; gross margin of 72.1% and adjusted net profit margin of 35.2% are both at historical highs.

Objectively, this is hard to call a “disappointing” financial report, but apparently, the market had even higher expectations for Pop Mart.

Over the past year, several investment banks have repeatedly raised their price targets, with their core logic being: IP popularity, overseas expansion potential, and category expansion potential. When the financial report failed to further reinforce the “global IP platform” long-term narrative, a stock price correction became almost inevitable.

In the performance briefing, Pop Mart CEO Wang Ning gave 20% growth guidance for 2026, and made it clear that they would not trade profits for scale expansion.

This “prudent” posture, in the eyes of capital markets used to 100% or even 200% growth in the past two years, looked more like an emergency brake.

But before the financials were announced, subtle cracks had already appeared in market sentiment.

From word-of-mouth controversies triggered by new IPs, to the continued decline in secondary market premiums, to plush toys and figurines on store shelves no longer sold out, every detail eroded investor confidence.

Pessimism and panic spiraled after the report’s release, eventually prompting a sharp sell-off—on that day, Pop Mart saw its biggest single-day decline and turnover rate in nearly three years.

For Pop Mart, what unsettles the market even more than “LABUBU can’t sell” is the persistent chain reaction caused by falling traffic and attention.

This pain after the ebb of the dividend has become a hard battle that Pop Mart cannot avoid.

Where Did Expectations Diverge?

Pop Mart’s “underperformance” is not essentially a collapse in scale but the failure of some optimistic expectations.

After the Q3 report, Morgan Stanley projected 26% growth for 2026 and 20% for 2027, almost in line with guidance revealed this time.

According to some investors, after surging over the past year, market position structures are heavily skewed toward “high expectation capital.”

Under such circumstances, if the fundamentals are fair but do not exceed expectations, and management’s guidance becomes conservative, capital naturally chooses to cash out; exiting is almost inevitable.

Breaking down the numbers, Q4 domestic business is the core bleeding point. Previous Q3 results said domestic growth would be 185%-190%, but the actual growth in the second half was just 135%, confirming a significant QoQ decline in Q4.

Performance in overseas markets became one of the major points of contention after the report came out.

Pop Mart COO Si De stated that in 2024, North American sales would be a little over 800 million yuan, and in 2025, would reach 6.8 billion yuan, lower than the company’s previous internal 7 billion forecast at the interim results.

What’s special about the North American market is that the online proportion is significantly higher, reaching 64%. Management explained this as mainly due to insufficient offline store capacity, so products are concentrated online.

With overall growth slowing, the long-discussed “IP dependence” was once again amplified by the market.

From the IP structure perspective, the MONSTERS series that includes LABUBU saw a concentrated restock period in the second half, bringing full-year revenue to 14.1 billion yuan, and the proportion climbed to above 38%, up from 34.7% in H1.

Despite bright spots among other IPs—the second tier, including SKULLPANDA, CRYBABY, MOLLY, and DIMMO, all had over 2.7 billion in revenue, while "Starman" exploded 16 times year-on-year to 2 billion in a single year—

The hundred-billion-level scale of LABUBU sets a high bar, making it exponentially more difficult for new IPs to match its contribution.

Another notable data point: even as Pop Mart membership grew by 57.5%, the annual revenue growth of its cornerstone IP, MOLLY, was just 38%.

This indirectly shows that when a single designer toy IP matures, its traffic monetization efficiency faces diminishing returns.

The biggest concern from the LABUBU effect is not single-point dependency at a high base, but the non-replicability of its “super leverage.”

IP is the starting point of everything. LABUBU not only drove performance but was Pop Mart’s core “bargaining chip” in leveraging top global resources over the past year.

From appearing in the Macy’s Thanksgiving Day Parade, to a “diplomatic” collaboration with the Thailand National Tourism Bureau, to cross-industry co-branding with LVMH’s century-old leather brand Moynat, and to content-based adventure deals with Sony Pictures, LABUBU has embodied virtually all of Pop Mart’s globalization and brand-upgrading ambitions.

Extreme glory breeds extreme anxiety: LABUBU’s peak is so high that the market is unsure how big the risk of retreat is: Where is the bottom of this “cycle,” and what will break it? These questions are still unanswered.

This pessimism continues to spread and gives rise to concern and uncertainty not only about 2026, but the longer-term outlook as well.

Who Will Hedge LABUBU?

External expectations keep oscillating between optimism and panic, but Pop Mart itself is still moving steadily according to its central strategy.

In the earnings call, Wang Ning emphasized again that Pop Mart’s strategy since the Hong Kong IPO has been unwavering: globalization, and IP-centric group development.

To support this overarching narrative, in 2025 Pop Mart completed its largest organizational restructuring in five years: regional headquarters were set up in Greater China, the Americas, Asia-Pacific, and Europe. Group Senior VP Wen Deyi served as Co-COO.

At the time: Si De managed Greater China and the Americas, Wen Deyi handled APAC and Europe.

Just two days before the financials announcement, Pop Mart finished another key personnel reshuffle: Wen Deyi moved to Chief Growth Officer (CGO), focusing on mid- and long-term strategy and innovative group business centered on IP; Si De now oversees the group’s platform departments and all four regional operations, fully driving internationalization.

The deeper meaning behind this division is that Pop Mart is trying to solve the deep-rooted contradiction between its rapidly growing business scale and relatively lagging organizational structure.

Currently, revenue outside mainland China accounts for nearly 45% for Pop Mart, and the scale of plush toys and figurines are now roughly equal.

As the foundations for globalization and group development are laid, the company urgently needs a more efficient “central nervous system” to run this massive multinational machine.

But compared to its own long-term vision, this stage is only the beginning.

According to internal communications, Pop Mart aims to make non-consumer products close to 50% of its business.

To that end, it is also advancing parks, accessories, desserts, film & entertainment, and other new business lines, and will launch small home appliances in April 2026 in cooperation with JD.com.

The logic is to use multidimensional consumer scenarios, channel systems, and content ecosystems to hedge against the volatility of single IP hits, thereby lengthening the IP life cycle and deepening per-IP monetization.

Compared to the randomness of IP explosions, channel expansion, experience optimization, operational efficiency, and new artist discovery are the deterministic variables that the company can truly control.

In domestics, Pop Mart’s strategic focus has shifted from “scale racing” to “stock quality.”

In 2025, the net increase in stores will be just 14, with resources mainly invested in upgrading existing stores and building flagship locations.

Management says more stores will be opened or remodeled this year, with the core logic of improving user dwell time and experience via the “store as theme park” model. Last year’s operational data supports this: for some stores, after expanding floor area by 30%-40%, store efficiency doubled.

Compared to the steady domestic adjustment, overseas markets remain the key growth engine—and the greatest source of uncertainty.

Management stated in the results briefing that overseas expansion has shifted from a China HQ-centered model to one radiating out from four regional hubs, gradually moving from capital cities to second- and third-tier cities, tourist destinations, and airports.

Supply chain and logistics are being rebuilt in parallel. Regional warehouse and transportation resources will be integrated, with centralized negotiations lowering costs and improving shipping schedules and demand matching.

Recently, Pop Mart set its US HQ in Culver City, Los Angeles, an area dense with creative companies in film and entertainment, 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 promoting co-branding between local IP and core homegrown IP, or developing and commercializing IPs based on local artists, both are seen as key to opening markets and increasing user recognition in each region.

Though the overseas business is currently a high-margin segment, the rising uncertainty is directly impacting profits. Disclosure at the performance meeting showed the company’s gross margin for January-February this year already dropped by one percentage point.

To mitigate market uncertainty, management said they will increase information disclosure in the future, announcing business status updates in May and November in addition to semiannual and annual reports, and will provide profit margin guidance this May.

For Pop Mart in 2026, the company is doubling down in every area where it can—heavier asset investment, more complex organization, more diverse businesses—to try and build a long-term growth path that can outlast the IP cycle.

But the natural decline of traffic, marginal fluctuations in profitability, and the costs and geopolitical friction of globalization, remain variables no consumer IP company can fully control.

In the face of business cycles, these factors often determine the short-term upper and lower limits of enterprises, and constitute the most sensitive parts when the market reprices.

Risk Warning and DisclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situations, or needs of any individual user. Users should consider whether any opinion, viewpoint, or conclusion in this article is suitable for their specific circumstances. Investing based on this is at your own risk. ```