Daily earnings exceed 35 million, Bubble Mart's rapid growth slows down

On March 25, Pop Mart (09992.HK) turned in a performance that could only be described as “explosive” in its 2025 results: full-year revenue was 37.12 billion yuan, up 184.7%; adjusted net profit was 13.08 billion yuan, up 284.5%; and gross margin jumped from 66.8% to 72.1%, with core operating indicators all hitting record highs.

However, the capital markets’ response was: the stock price plunged 22.51% on March 25 alone, and the market value evaporated by more than HK$65 billion.

“We’re like a rookie race car driver, quickly pulled onto an F1 track.” At the results briefing, Pop Mart founder, chairman of the board, and CEO Wang Ning described 2025 this way: “During the ultra-fast speed, whether you’re the driver or the race car, you’re under enormous pressure.”

Now, this 15-year-old trend-toy giant has chosen, on purpose, to enter the “service pit” in 2026—to top up its fuel, change its tires, and build strength for the next, longer stretch of the race.

Year of “Ramping Up”: Three Breakthroughs

According to the financial report, in 2025 Pop Mart achieved key breakthroughs across three dimensions: revenue scale, product mix, and globalization.

In 2025, revenue for the first time broke through the 30 billion yuan mark. It leapt from 13 billion yuan to 37.1 billion yuan. Net profit of 13 billion yuan was equivalent to earning more than 35 million yuan per day. Gross margin rose to 72.1%, meaning that for every 100 yuan consumers spend on Pop Mart products, the company can capture 72 yuan—profitability looks comparable to that of premium baijiu.

In terms of product mix, plush products surpassed blind-box figures for the first time and became the highest-revenue category. Full-year revenue reached 18.71 billion yuan, up 560.6%, with their share of total revenue rising from 21.7% to 50.4%. Behind the category shift is a change in users’ consumption logic: figures are static collectibles, while plush toys naturally offer stronger companionship attributes and emotional interaction.

In the market, in 2025 overseas revenue reached 16.27 billion yuan, up 291.9%. Its share of total revenue rose from 31.8% to 43.8%, achieving a globalization breakthrough. Among them, revenue in the Americas surged from 0.8 billion yuan to 6.8 billion yuan—an increase of nearly 7.5 times; Europe and other regions grew 506.3%. In 2025, LABUBU not only made an appearance in the Macy’s Thanksgiving Day Parade in New York, but also showed up frequently at fashion runways in places like London and Paris.

“Expectation Gap”: Why Did the Stock Price Drop So Much?

On the day of the results announcement, Pop Mart’s stock opened higher but then fell steadily, with a straight plunge in the afternoon. It closed down 22.51%. It kept dropping nearly 10% on March 26, and the two days combined saw a decline of roughly 30%.

What is the market worried about?

First is “expectations being overdrawn.” In the first half of 2025, Pop Mart’s share price rose 500% year-on-year, earning it the label “the Moutai for young people.” Investors had already baked in growth expectations for the coming years in advance. In a research note released before the financial report, Morgan Stanley said market views were highly divided, with major disagreements between bulls and bears, and it expected the stock to keep swinging after the earnings release.

Second is the “expectation gap.” Although revenue grew 184.7% to 37.12 billion yuan, it was still slightly below the 37.96 billion yuan broadly expected by institutions. Earlier, institutions including JPMorgan, Bank of Communications International, and Goldman Sachs had projected revenue growth in the range of 190% to 209%, while Pop Mart’s 184.7% landed at the lower end of some institutions’ expected range.

More fundamentally, there are doubts about the sustainability of growth. Analysts at HSBC Global Research said in a recent report that, “the hyper-fast growth brought by Labubu will fade,” and they defined 2026 as a year for Pop Mart to “rebase.” “Under a big tree, nothing grows—only whatever it allows.” That is how some market observers describe Pop Mart’s IP landscape.

“Service Pit” Mode: Proactively Slow Down to Build Inner Strength

Facing unprecedented heat and market skepticism, Wang Ning’s choice was to proactively slow down.

“This year we hope to strive for a growth rate of no less than 20%; we won’t pursue a particularly aggressive growth model that increases revenue but not profits.” At the earnings meeting, he clearly laid out 2026’s growth guidance.

This target stands in sharp contrast to the actual growth pace in 2025. Wang Ning said that last year’s results far exceeded the goals the management had set out in its performance guidance—and it also brought the company “pressure.” He repeatedly emphasized a business philosophy of “respecting time and respecting operations,” hoping the business would return to “healthy linear growth.”

In 2025, when Pop Mart’s heat was at its highest, it proactively delayed the launch timeline for the LABUBU 4.0 series and reduced brand co-branding activities, putting more resources into strengthening the supply chain, building global channel capabilities, and developing long-term IP content. In China, the company slowed store openings and focused more on improving per-store operating efficiency and user experience. “Last year we said ‘when the weather clears, we repair the roof.’” Wang Ning explained the 2025 strategy this way.

Hidden Concerns: Inventory, Organizational Capability, and IP “Polarization”

Although management chose to slow down and build inner strength, the challenges facing Pop Mart remain clearly visible.

Pressure on inventory. As of end-2025, the company’s inventory book value stood at 5.47 billion yuan, up 259% from 1.52 billion yuan at end-2024. Inventory turnover days extended from 102 days to 123 days. Management explained that this was due to longer transportation times resulting from the higher share of overseas revenue, as well as proactive stock preparation to respond to global store expansion. But in the trend-toy industry, once market sentiment shifts, a large write-down of inventory would directly erode profits. In addition, changes in overseas revenue recognition timing and adjustments to the launch schedules of some new products also had a temporary impact on inventory metrics.

Organizational capability challenges. As of end-2025, Pop Mart had more than 11,000 employees across 21 countries and regions worldwide, with non-Mainland Chinese employees nearing 4,000. Rapid global expansion brings unprecedented pressure on organizational management. When overseas stores, supply chains, and marketing teams are built quickly, the complexity of hiring, retaining, and integrating local talent rises. At the earnings meeting, Wang Ning also candidly acknowledged that there were many shortcomings during hyper-fast growth, including organizational management, bridging information across regions, and coordination between front/middle/back-office teams.

Risk of IP “polarization.” This is the market’s most core concern. In 2025, revenue of the THE MONSTERS family, to which LABUBU belongs, reached 14.16 billion yuan, up 365.7%, accounting for as much as 38.1% of total group revenue. In the first half, this figure was 3.47 billion yuan; by the second half, it had jumped to about 40%. The second-largest IP SKULLPANDA generated 3.54 billion yuan, accounting for less than 10%. The once flagship IP MOLLY generated 2.9 billion yuan, with growth far lagging behind LABUBU.

Wang Ning’s response was: “Pop Mart is not only LABUBU. Even if we didn’t have LABUBU last year, we still achieved rapid growth.” He said the growth of IPs such as Star Platon and DIMOO can demonstrate the IP operation capability across the entire platform. Financial report data show that Star Platon surged from 120 million yuan in 2024 to 2.06 billion yuan, up more than 1,600%—and it is indeed one of the fastest-growing IPs.

But the market clearly expects a “second pillar” that can stand shoulder-to-shoulder with LABUBU.

Breaking the Stalemate with Three Moves

Pop Mart’s management is not unaware of the problems. Judging from what the company said during the earnings call, it is making three moves.

The first move is IP matrixing. By end-2025, the company increased the number of new IP releases to 57, nearly doubling. Large-scale testing in itself is a method to counter the risk of over-reliance on a single IP. At the same time, the company continues to deepen IP in terms of content. The LABUBU live-action animated film co-produced with Sony Pictures has entered the script stage and will be directed by Paul King, the director of Paddington Bear; picture books and immersive experiences at the amusement parks are also being advanced in parallel.

The second move is continuing to deepen globalization. The company will reallocate the funds that were originally planned for acquiring IPs, toward overseas market expansion, with higher priority given to global expansion than to buying external IP. In 2026, the company plans to focus on opening up the Middle East, South Asia, Europe, and South America. In the U.S. market, the number of stores in 2026 will exceed 100. Two flagship stores—Times Square and Fifth Avenue in New York—are planned to open in the fourth quarter.

The third move is to tear up the “blind-box company” label. The plush product category has become the top source of revenue. City parks Phase 1.5 are expected to be completed in the summer of 2026, and Phase 2 planning has also been launched. The company is also expanding its accessory brand “popop” and dessert brand “POP BAKERY,” and it will even launch, in April, small home appliance products with IP at the core.