Pop Mart shares dive as Labubu craze cools
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The average transaction price of second-hand mini Labubu series at Qiandao, a Chinese reselling and trading platform, dropped 27 per cent over the past 30 days.
PHOTO: REUTERS
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Hong Kong - Pop Mart International Group shares plunged on Oct 23, reflecting renewed concerns about the toymaker’s long-term sales outlook despite a strong third-quarter performance.
The Hong Kong-listed stock dropped 12.3 per cent as at 1.10pm. The counter eventually ended 9.4 per cent lower on Oct 23.
The decline reversed a 2.4 per cent gain on Oct 22, after the manufacturer of popular Labubu dolls reported annual revenue growth of as much as 250 per cent in the three months ended September.
“We think its third-quarter revenue growth topped market consensus, but investors may be more concerned about the likely deceleration in the coming quarters,” said Mr Jeff Zhang, an analyst at Morningstar.
“We also expect Pop Mart’s top-line growth to peak in 2025, before a slowdown from 2026 onwards.”
The average transaction price of second-hand mini Labubu series at Qiandao, a Chinese reselling and trading platform focused on pop toys, dropped 27 per cent over the past 30 days to 1,149 yuan (S$209) for a 14-set box as of late morning on Oct 23. This almost erased the premium over its official retail price of 1,106 yuan.
The premium is an important metric used by some investors to gauge demand for Pop Mart’s sales driver, while analysts have also pointed to a possibility of increased supply causing the price decline.
Pop Mart’s shares have lost steam in recent months and are down about 30 per cent since a late-August peak, hurt by profit-taking and concerns that frenzied demand for its products is unlikely to be sustained. The Beijing-based firm emerged as the hottest Chinese consumer stock over the past year, riding on a wave of demand for its toothy plush toys that have become a global craze.
Now, traders are adding bearish bets on the stock. Its short-selling interest as a percentage of shares available for public trading rose to 1.4 per cent as at Oct 21, up from 0.2 per cent in early September, according to S&P Global data.
Options on Pop Mart shares, which were launched last week, have been active. On Oct 23, the number of contracts traded surpassed 28,500, with about 16,000 puts and 12,500 calls changing hands. The calls fell in value while the puts gained, indicating demand for bearish contracts. BLOOMBERG
