(Dec 30): Pop Mart International Group Ltd shares slid the most in three weeks after media reports of waning reseller demand for its Labubu toys dented investor sentiment.
Shares of the Hong Kong-listed firm dropped as much as 6.2% on Tuesday, making it one of the worst performers on the MSCI Asia-Pacific Index. The selloff followed reports that some scalpers had paused buying Labubus after price swings in China’s secondary market signalled weakening appetite.
The reports are the latest hit to investor confidence in Pop Mart, which had staged one of the most dramatic market rallies in recent history thanks to its trendy dolls. But softening prices and data suggesting weaker-than-expected holiday season sales abroad have fuelled doubts over the brand’s staying power.
“With lingering investor worries that Pop Mart’s product buzz may be cooling, such reports of waning demand tend to hit the shares hard,” said Kenny Ng, a strategist at China Everbright Securities International Co Ltd.
That slump, which started in August, has sent shares tumbling by some 44% and wiped out more than US$25 billion ($32.1 billion) in market value. Still, Pop Mart’s shares are still up more than double this year and the company is valued at roughly four times larger than peer Sanrio Co.
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Toy resale platform Qiandao shows the average prices of full sets of mini Labubus or the Big Into Energy series have fallen below official retail levels.
Amid softening demand, Pop Mart is betting on other intellectual property characters to replicate the success of its Labubu dolls, including its Crybaby line, which held an exhibit in Shanghai this month, as well as its Twinkle Twinkle and Hirono dolls.
Some investors may also be rotating out China’s “new consumption” stocks to lock in profit, said Morningstar Inc analyst Jeff Zhang. Chinese jewellery maker Laopu Gold Co declined more than 6% on Tuesday while bubble tea chain Mixue Group dropped nearly 4%.
Uploaded by Magessan Varatharaja
