Pop Mart's stock price falls under pressure as Bernstein warns that Q4 performance may miss expectations.

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Pop Mart's stock price is facing pressure after investment bank Bernstein released a report warning that its fourth-quarter results may fall short of expectations.

On November 11, Bernstein issued a research report citing multiple data sources which show that Pop Mart’s demand in both China and overseas markets slowed across the board in October. The report states that the observed demand weakness has intensified since its peak level in June. The analysts wrote in the report:

Data from independent sources such as transaction figures, social media buzz, and search interest have weakened, collectively painting a picture of a slowdown in fundamental demand. It’s hard to attribute this to mere noise or (consumption) channel shift.

The report believes that "the magnitude and consistency of the declines in October's indicators suggest that fourth-quarter results may disappoint market expectations." Based on this, Bernstein maintained its target price for Pop Mart at HK$225.

On Wednesday, November 12, Pop Mart’s stock in the Hong Kong market dropped as much as 3.7% during intraday trading, becoming one of the biggest decliners on the market. Although the company’s third-quarter sales rose as much as 250% year-on-year, the market is questioning the sustainability of the feverish demand for its popular products, especially the Labubu dolls.

Before Bernstein’s warning, Pop Mart had already undergone a round of correction due to investor concerns about its outlook and profit-taking. The stock was once one of the hottest trades in China’s consumer sector, but now its price has fallen nearly 40% from its record high in late August, wiping out $20 billion in market value.

Despite the recent sharp pullback, the stock is still up about 140% cumulatively so far this year. Notably, among the more than 40 brokerages covering Pop Mart, Bernstein is the only one to give an “underperform” rating, highlighting notable differences in market views on its future performance.

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