On August 20, 2026, POP MART released its interim results for the first half of the year, posting revenue of RMB 17.17 billion, a 23.8% year-on-year increase, and net profit attributable to shareholders of RMB 5.04 billion, up roughly 10%. Taken at face value, these figures still represent a commendable performance in the consumer sector.
However, the capital market's response was swift and brutal, with shares plunging over 8.8% at the open the following day to hit a five-month low. The core issue isn't how much the company earned, but rather how far it fell short of expectations. Before the earnings release, the market had anticipated first-half revenue of RMB 19.98 billion and net profit of RMB 6.64 billion, meaning actual revenue missed by about RMB 2.8 billion and net profit by RMB 1.6 billion. When a company's actual profit falls short of consensus estimates by a full RMB 1.6 billion, the word "growth" loses its persuasive power.
This isn't the first time POP MART has caught the capital market off guard. On March 25, 2026, the company released its full-year 2025 results, showing revenue of RMB 37.12 billion (up 184.7%) and adjusted net profit of RMB 13.08 billion (up 284.5%). Yet on the very day of the announcement, shares went into a tailspin, closing down 22.51% at HK$168.30, erasing HK$65.575 billion in market value in a single session. At that time, the market was already deeply concerned about the company's over-reliance on a single IP and the sustainability of its overseas growth. Over the following six months, shares languished in a narrow range between HK$140 and HK$180, failing to recover lost ground. The half-year results have now validated those earlier fears.
Labubu Cools Down: Can Xingxingren Take Over?
If 2025 was "Labubu's solo feast" for POP MART, then the first half of 2026 has clearly shown signs of the party winding down. The THE MONSTERS family, to which Labubu belongs, generated revenue of RMB 4.45 billion in H1, a 7.5% year-on-year decline, with its revenue share dropping sharply from 34.7% to 26%. This marks the first negative year-on-year revenue growth for this blockbuster IP since its explosive rise in 2025. Even more concerning is the sequential trend, as THE MONSTERS IP sales plunged 52.3% half-over-half, following H2 2025 revenue of RMB 9.35 billion. The sales slump of this single IP alone dragged down the group's overall revenue growth by 11 percentage points.
The cooling of Labubu is not confined to financial statements; secondary market signals are even more direct. In June 2026, the Labubu 4.0 "Retro Barbershop" series launched, with many regular styles dropping below the official retail price of RMB 159 within half an hour of release, with transaction prices falling below RMB 100, a decline of over 30%. The lowest price for a single random box was RMB 77, nearly halved from the retail price, while the "Oatmeal Temperature" style, considered a "dud," even dropped to RMB 65 at one point. This phenomenon shattered the long-held market belief that Labubu regular styles retain their value. Deutsche Bank's channel research showed that the first-day sell-through rate for this series on e-commerce platforms was only 30% to 50% of that seen for major IP launches earlier in 2026, with inventory not selling out immediately. Previously, Labubu new product launches selling out in seconds was practically a rule.
From "hard to get" to "breaking price on launch," Labubu's secondary market has shifted from frenzy to rationality, even slipping into indifference. Data from the Qiandao app shows that some Labubu products have fallen about 14% in price over the past month, and are down over 80% from their peaks. When an IP once touted as the "flagship of globalization" begins to lose pricing power and scarcity, the business logic underlying it faces fundamental questioning.
While Labubu recedes, POP MART has unveiled a new hope: Xingxingren. In H1, Xingxingren revenue reached RMB 2.65 billion, a staggering 580.6% year-on-year surge, making it the group's second-largest IP by revenue. On the same day as the earnings release, the Xingxingren "Farm Series" sold out across the internet within seconds, with the hidden edition's secondary market resale price soaring to RMB 1,799. However, this "relay" narrative faces significant doubts. The "Farm Series" secondary market prices spiked briefly before rapidly weakening, falling to around RMB 140 by August 24, with premium space significantly compressed. Among regular styles, "Stubborn Cowboy" and "Loyal Gray Wolf" have both dropped below their retail prices to RMB 122 and RMB 113, respectively; the hidden "Ugly Duckling" hit a low of RMB 647, down 64% from its historical peak.
Si De, Executive Director and COO of POP MART, once candidly remarked, "A large number of new users came because of Labubu, but they don't understand the designer toy culture or other IPs." If the tens of millions of new users who flooded in during 2025 were essentially attracted by the symbol of Labubu alone, rather than genuinely embracing "designer toy culture" or the brand itself, then is Xingxingren's explosion a "validated second growth curve," or are "the same group of trend-chasing users just picking up a new toy"? The answer to this question will directly determine the benchmark for POP MART's future valuation, whether as a "content IP company" or a "trendy single-product company."
Overseas Narrative Hits Headwinds: International Revenue Declines
The core narrative driving POP MART's valuation expansion over the past year has been the globalization story of "Chinese designer toys going global." In the first half of 2026, however, this story is facing serious challenges. Data shows that overseas market revenue fell 11% year-on-year to RMB 4.97 billion. The once-glamorous Americas market, which saw a net addition of 22 stores in six months, saw revenue slide 16.5% to RMB 1.89 billion. Asia-Pacific (ex-China) revenue dropped 9.7% to RMB 2.58 billion. While Europe and other regions posted 5.9% positive growth, the absolute scale of RMB 510 million is insufficient to offset contractions elsewhere.
The collapse in online channels is particularly striking: Asia-Pacific online revenue fell 39.8%, with Shopee platform sales down 62.1%; Americas online revenue declined 45.6%; and European online revenue dropped 59.0%. The Labubu traffic dividend that once swept through platforms like TikTok is receding just as rapidly. Management attributes the overseas downturn to "the fading of external traffic dividends" and "core IP heat returning to normal levels." But the deeper issue lies in the management shortcomings exposed by the rapid expansion of the past year. Si De admitted at the results conference that a large number of overseas employees joined in 2025, "with brand awareness limited to Labubu 3.0, and their professional knowledge even less than that of ordinary users." When sales explode without sufficient accumulation in designer toy culture, user base, and team capability, "traffic declines and sales pullbacks are relatively pronounced" once the hype fades.
The overseas revenue share has plunged from 40.3% in H1 2025 and 43.8% for the full year 2025 to approximately 29% in H1 2026, with China's share jumping to 71%. POP MART spent a year reshaping itself into a "globalized company," only to be pushed back into a "Chinese domestic company" within six months. The contraction in overseas operations, combined with Labubu's cooling, is pushing POP MART toward another dangerous tipping point: an inventory crisis. As of the end of June 2026, inventory had grown from RMB 5.473 billion at the end of last year to RMB 6.102 billion, with inventory turnover days soaring from 83 days a year earlier to 201 days, the highest for the same period in six years. The near-120-day increase in turnover days implies that a large volume of goods is flowing to consumers at a pace far slower than expected. Management acknowledged that previous sales forecasts based on sell-out scenarios were off the mark, leading to inventory buildup. When an IP shifts from "can't buy it" to "can't sell it," accumulated inventory transforms from an asset into a liability.
Meanwhile, profitability efficiency is also deteriorating. The adjusted net margin fell from 33.9% to 30% year-on-year, and gross margin edged down from 70.3% to 69.7%. Net profit growth of roughly 10% is clearly lagging behind revenue growth of 23.8%, with earnings efficiency being diluted by scale expansion. Additionally, the company absorbed RMB 720 million in foreign exchange losses, compared to a RMB 120 million gain in the same period last year.
Management Opts for a "Slowdown," but Market Confidence Needs Time to Recover
Facing these difficulties, POP MART's management has not shied away. Founder Wang Ning stated bluntly at the results conference, "We will likely fail to complete the 20% growth target set at the beginning of the year." He defined 2026 as the company's "year of operational adjustment," likening it to "a Formula 1 car entering the pit lane for a brief rest, refueling, and changing tires." Wang Ning acknowledged that while 2025's numbers looked good, they were to some extent "one good thing masking a hundred flaws," noting that customers facing sold-out shelves or long queues at stores "should not be the norm."
To appease the market, the company announced a share buyback plan of no less than RMB 2 billion and no more than RMB 5 billion over the next six months. This is the first time POP MART has announced such a large-scale buyback at a results conference. However, institutional reaction remains lukewarm. JPMorgan downgraded the stock from "Neutral" to "Underweight," slashing its target price from HK$165 to HK$120; HSBC Research cut its target price by 19% to HK$136.5; BOCOM International downgraded to "Neutral" with a target of HK$174.8; and BofA Securities lowered its 2026/2027 adjusted EPS forecasts by 22% and 24%, respectively. Multiple institutions agree that the degree of overseas operational deleveraging has exceeded expectations, and the visibility of earnings recovery remains insufficient to support more optimistic views.
Looking back at POP MART's capital market journey, shares hit an all-time high of HK$339.80 in August 2025, when the market fully priced in the growth dividend from Labubu's global explosion. Designer toy globalization was seen as a long-term high-prosperity track, with investors expecting domestic designer toys to replicate the global expansion path of collectible toys. As of August 2026, the stock has halved from its peak, with market value shrinking by over HK$200 billion. The market is undergoing a valuation reset for POP MART, essentially a re-examination of the designer toy globalization narrative.
Objectively speaking, the globalization dividend for designer toys has not entirely disappeared, but the era of achieving multi-fold growth in a short period through viral social media spread of a single IP has likely come to an end. Designer toy globalization is a slow business, not just about selling products to overseas stores, but also requires localized IP operations, fan community building, and cultural adaptation. POP MART's overseas explosion in 2025 was largely an accidental result of a traffic dividend, not the fruit of mature localized operations. Once the traffic tide recedes, the true overseas demand level becomes apparent.
In the short term, POP MART's domestic market retains resilience with ample IP reserves, and the plush category can still sustain relatively high growth in the domestic business. The company has strong cash flow, providing the capital base for substantial buybacks, and its fundamentals are not uniformly deteriorating. However, risk points remain prominent. First, the heat of the core blockbuster IP Labubu continues to decline, and falling secondary market prices will inversely affect consumer purchasing intentions, leaving it uncertain whether IP revenue will slide further. Second, the overseas business has hit a bottleneck, with online channels declining sharply, store expansion diverging from revenue growth, and new IPs failing to break through globally, meaning the second growth curve is underdelivering. Third, IP iteration carries uncertainty, as Xingxingren's domestic breakout leaves questions about its lifecycle and whether it can spawn the next global IP. Fourth, gross margin has already shown a slight decline, and with intensifying IP competition and increased marketing investment for new products, profitability faces further downside pressure.
The secondary market has already reacted in advance, with valuations continuously contracting despite positive earnings growth, as the market is no longer willing to pay a premium for high-growth expectations. For the designer toy industry, POP MART's predicament also carries bellwether significance. Designer toys are highly tied to IP lifecycles, blockbuster hits are hard to come by, and traffic dividends are fleeting. The export of domestic designer toys cannot rely on accidental viral success; the long-term test lies in sustained IP creation capability and localized operational proficiency.
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