Is Pop Mart’s Recent Stock Decline a Buying Opportunity or a Warning Sign?

The recent 0.98% rise in Pop Mart International Group’s stock price on September 5, 2025, offers a fleeting counterpoint to a broader narrative of volatility and uncertainty. With the stock trading at HK$309.60, investors face a critical question: Is this decline a buying opportunity for a company with a robust IP-driven growth strategy, or a warning sign of waning demand and overvaluation risks? To answer this, we must dissect three pillars: the sustainability of consumer demand, the implications of index inclusion, and the strength of Pop Mart’s long-term innovation pipeline.

Demand Sustainability: A Balancing Act Between Hype and Reality

Pop Mart’s meteoric rise has always been tied to the Labubu doll, a character that fueled a global frenzy. However, recent data reveals cracks in this foundation. According to a Bloomberg report, secondary market prices for Labubu have plummeted due to restocking and declining consumer interest, with analysts citing “negative feedback on the quality of new product lines” [1]. This raises concerns about the durability of the company’s core revenue driver.

Yet, Pop Mart is not entirely reliant on Labubu. The company’s 2025 strategy has seen a 1289% surge in plush toy sales and the immediate sellout of POP BLOCK sets [2]. These innovations, coupled with collaborations with over 30 toy designers, underscore a deliberate effort to diversify its IP portfolio. The CEO’s recent announcement of a mini Labubu phone accessory—a “blockbuster” product—further signals confidence in sustaining demand through product evolution [3].

Still, the risk of oversupply looms. With 100 new overseas stores planned for 2025 and rapid U.S. market expansion (1,142.3% revenue growth), the company’s aggressive scaling could outpace demand, particularly if secondary market enthusiasm wanes [4].

Index Inclusion: A Double-Edged Sword

Pop Mart’s inclusion in the Hang Seng Index and Hang Seng H-Share Index ETF on September 8, 2025, is a landmark event. Goldman Sachs estimates this will attract $185 million to $610 million in passive fund inflows, potentially boosting liquidity and price stability [5]. However, history suggests caution. As noted by Reuters, post-index inclusion often triggers profit-taking, which contributed to Pop Mart’s August-September decline [6].

The technical indicators further complicate the picture. While the long-term average suggests a buy, the short-term Moving Average and a pivot top on August 26 signal a sell [7]. Morgan Stanley’s revised target price of HKD382 (a 22.45% upside) reflects optimism, but the stock faces resistance at HK$313.54 and support at HK$253.00 [7]. For investors, the key question is whether the index-driven inflows will outweigh the short-term volatility.

Long-Term IP-Driven Growth: Beyond the Blind Box Model

Pop Mart’s enduring strength lies in its IP ecosystem. The company is transitioning from a blind box-centric model to a diversified IP commercialization strategy. This includes licensing deals (e.g., the “Labubu & Friends” UT Collection with Uniqlo), content creation (an upcoming animation series), and themed retail experiences [8]. Such moves aim to deepen brand equity and reduce reliance on fleeting trends.

Global expansion also bolsters long-term potential. The Louvre Paris store and “quality over speed” overseas strategy highlight a focus on cultural resonance and sustainable growth [9]. With 30 billion yuan in 2025 revenue projected, the company’s IP-driven model appears resilient—if not yet immune to market skepticism.

Conclusion: A Calculated Bet on Innovation

Pop Mart’s stock decline reflects both near-term challenges and long-term promise. While demand for Labubu shows signs of softening and short-term volatility persists, the company’s IP diversification, global expansion, and index inclusion create a compelling case for cautious optimism. Investors must weigh the risks of overvaluation and oversupply against the potential rewards of a brand redefining itself as a global cultural force.

For those with a medium-term horizon, the current price near HK$309.60—trading below Morgan Stanley’s HKD382 target—could represent an entry point, provided the company executes its IP and expansion strategies effectively. However, the mixed technical signals and short-selling activity suggest prudence. As always, the answer lies not in a single data point but in the interplay of innovation, execution, and market sentiment.

Source:
[1] Pop Mart Shares Fall on Demand Concern, Post-Index ... [https://www.bloomberg.com/news/articles/2025-09-08/pop-mart-shares-fall-on-demand-concern-post-index-entry-selling]
[2] Reshaping the Global Trend Industry with Its IP Ecosystem, POP ... [https://www.wivb.com/business/press-releases/cision/20250627CN20155/reshaping-the-global-trend-industry-with-its-ip-ecosystem-pop-mart-named-to-times-2025-list-of-the-worlds-most-influential-companies]
[3] Mini Labubus are coming after your mobile phone, as Pop ..., [https://www.scmp.com/business/china-business/article/3322488/mini-labubus-are-coming-after-your-mobile-phone-pop-mart-aims-double-2025-sales]
[4] POP MART posts strong H1 2025 results, focuses on US market [https://technode.com/2025/08/21/pop-mart-posts-strong-h1-2025-results-focuses-on-us-market/]
[5] The results of the Hang Seng Index's quarterly review will ... [https://news.futunn.com/en/post/61708095/the-results-of-the-hang-seng-index-s-quarterly-review]
[6] Pop Mart Was Saved by the Labubu Doll. But How Long ... [https://pro.thestreet.com/trade-ideas/pop-mart-was-saved-by-the-labubu-doll-but-how-long-will-the-love-affair-last]
[7] Pop Mart International Group Stock Forecast [https://stockinvest.us/stock/9992.HK]
[8] Pop Mart FY25 H1 Earnings Preview: Can Labubu's Hype ... [https://pepperstone.com/en/analysis/pop-mart-earnings-preview-can-labubu-s-hype-sustain-long-term-growth]
[9] Pop Mart's Global Expansion: Crafting a Collectible Empire [https://blogs.pageon.ai/pop-marts-global-expansion-crafting-collectible-empire-strategic-visualization]