To The Moon

Pop Mart (09992) has been on a spectacular rally, surging 300% last year and up another 49% year-to-date (YTD), recently hitting new all-time highs. Many now argue that traditional investment favorites like gold and Moutai are losing relevance among younger generations, while trendy collectibles like Labubu and Molly are capturing Gen Z's attention.

POP MART (09992)

Pop Mart’s Appeal: The New Wave of Collectibles

Pop Mart has successfully built a business around blind box culture, tapping into the psychology of surprise, exclusivity, and collectibility. Their products, including Labubu, Molly, Dimoo, and Skullpanda, have become social phenomena, frequently discussed among young consumers. The company has positioned itself not just as a toy seller, but as a cultural and lifestyle brand, blending elements of art, scarcity, and fandom.

Personally, I am not a customer of Pop Mart and have no interest in buying their products. However, I acknowledge their strong business model. The demand is evident—many people around me, including my friends, are talking about Labubu and other collectibles, which suggests high consumer engagement and strong sales performance.

Why I Won't Buy the Stock?

Despite its popularity, I remain skeptical about investing in Pop Mart for several reasons:

1. Current Valuation Seems High – Pop Mart closed at $134.300, near its 52-week high of $139.800, far from its 52-week low of $25.378. Buying at these levels could be risky, as the stock may be overheated.

2. Low Dividend Yield – For investors seeking passive income, Pop Mart's dividend yield is very low, making it less attractive compared to other investment opportunities.

3. Uncertain Long-Term Demand – While Labubu and Molly are trendy now, the toy and collectibles market is heavily influenced by shifting consumer preferences. Today's popular items may not remain in demand in the future, making long-term revenue growth uncertain.

4. Competition and Market Saturation – Pop Mart faces competition from both domestic and international collectible brands, as well as potential saturation in the market. If consumers move on to new trends, sustaining current sales growth could be challenging.

5. Economic Downturn Risks – Collectibles are a discretionary purchase, meaning demand could weaken during economic downturns when consumers cut back on non-essential spending.

Final Thoughts

Pop Mart has undeniably built a strong brand and capitalized on the growing trend of collectible culture. However, as an investor, I prefer stocks with more stability, consistent earnings, and dividends. While I see the high demand for their products now, there’s no guarantee that these trends will continue in the long run.