Chinese Toy Company’s Stock Plunges Despite Record Revenue Growth

Pop Mart, the company behind the viral Labubu monster dolls, saw its stock drop 23% despite reporting massive revenue increases. Analysts worry the company relies too heavily on its popular Labubu character for growth.

HONG KONG (AP) — Stock prices for Pop Mart, the Chinese company that creates the wildly popular Labubu monster dolls, dropped nearly 23% on Wednesday even though the business posted impressive revenue numbers. Financial experts say investors are concerned about the toy maker’s heavy dependence on income from its Labubu product line.

The dramatic decline in Pop Mart’s Hong Kong stock market value occurred after the company announced yearly revenue of 37.1 billion yuan ($5.4 billion) for 2025, representing a 185% increase compared to the previous year, though falling just short of what analysts had predicted.

The company’s annual profits reached 12.8 billion yuan ($1.9 billion) for the full year, marking an increase of more than 300% from the 3.1 billion yuan earned in 2024.

The distinctive Labubu dolls, featuring pointed ears and prominent teeth, became a global sensation starting in 2024 after gaining traction on social media platforms and appearing as accessories carried by famous personalities. Pop Mart retail locations in numerous cities experienced long customer lines as collectors eagerly sought the newest releases.

According to Jeff Zhang, an equity analyst with Morningstar, Pop Mart’s dependence on Labubu products likely contributed to Wednesday’s stock price decline. Despite the recent selloff, the company’s shares remain 33% higher than they were a year ago.

“We think the market’s biggest concern still lies in the earnings growth prospect,” Zhang said, though he noted that the Labubu phenomenon appears “yet to cease.” The company generates approximately 38% of its revenue from “The Monsters” brand of proprietary characters, which encompasses Labubu.

“Labubu’s popularity has been a huge success,” said Gary Ng, a senior economist at French bank Natixis. “However, there is an emerging concern that there is no second growth driver.”

Ng warned that if Labubu and related merchandise lose momentum, it could create a “concentration risk” that would negatively impact investor confidence. Pop Mart’s roster also features other characters like Molly and Skullpanda.

During Wednesday’s earnings presentation, Pop Mart CEO Wang Ning attempted to address investor anxiety about the company’s growth potential.

“People have expressed worries when talking about Labubu,” Wang said, “(About) whether it might just be a craze, and if it would be experiencing huge fluctuations.”

“However, based on our observations, we are pleased to see that it is becoming a lifestyle for more and more people,” he said. “We have strong expectations and confidence for (its) future.”

Beyond toy manufacturing, Pop Mart operates a theme park in Beijing and recently announced a collaboration with Sony Pictures Entertainment to produce a Labubu-centered film.

The company has been working to expand internationally and increase production capacity, establishing manufacturing partnerships in Cambodia, Indonesia, and Mexico in addition to its operations in China.