As Labubu 3.0 ignites global frenzy, is the magic priced in?
The tiny yet mischievous Labubu has done it again. On April 25, Pop Mart’s app rocketed to the top of the US App Store’s Shopping category for the first time ever—an extraordinary feat for a Chinese designer toy company still expanding globally. That same evening, its LABUBU 3.0 series sold out instantly across China. The market's reaction? A 12% surge in Pop Mart’s share price, vaulting it to a new all-time high of HK$199.
I won’t deny it—seeing a company with roots in Beijing’s toy aisles now command such global attention is exhilarating. But with shares up over 475% in the past year and the valuation nearing nosebleed territory (a trailing P/E of 77.5 and price-to-sales ratio over 18), the question feels inevitable: have we missed the train?
Labubu conquers cultures faster than you refresh your portfolio
Not necessarily.
From Cult Toymaker to Cultural Powerhouse
Pop Mart’s meteoric rise rests not on gimmicks but on intellectual property—highly stylised characters like Molly, Crybaby, and of course, Labubu, which tap into a potent mix of nostalgia, quirkiness, and scarcity. With global consumer brands struggling to stay fresh, $POP MART(09992)$ has done what few others can: create emotional attachment through novelty and community.
The numbers back it up. The company posted revenue of HK$13.04B with a net income of HK$3.13B in the past twelve months, boasting a dazzling profit margin of nearly 24%. Its return on equity stands at a towering 35%, an enviable feat in any sector—let alone toys. More tellingly, its return on assets is over 21%, showcasing how efficiently Pop Mart translates creative assets into hard cash.
Yes, It’s Pricey—But Not Hollow
The valuation is rich, there’s no getting around it. A P/E above 77 places Pop Mart in the same realm as elite growth stocks, demanding relentless execution and international expansion. Still, I’d argue the premium is partially justified.
Unlike other consumer stocks where innovation is often bolted on, $POP MART(09992)$ is an innovation factory by design. The company has gone beyond blind boxes and vending machines, embracing digital collectables, mobile gaming, and most notably, international IP licensing. LABUBU 3.0 is more than a toy drop—it’s a cross-border cultural event.
What investors might miss is that Pop Mart isn’t just pushing out more toys; it’s pushing the boundaries of IP monetisation. Its UGC (user-generated content) collaborations, NFTs, and pop-up installations in markets like the US, Japan, and Thailand reflect a shrewd ability to scale without diluting brand mystique.
Pop Mart defies the market, soaring while HSI still recovers
Labubu vs Molly: A Tale of Two Icons
If forced to pick between Molly and Labubu, I’d go with Labubu—for now. The little devilish figure, created by artist Kasing Lung, taps into a global aesthetic of anti-cuteness that resonates widely. Its appeal feels more 'underground viral' than mass-produced kawaii, which grants it stronger staying power, especially among Gen Z.
That said, Molly remains Pop Mart’s OG icon. And Crybaby? Still early, but the melancholic vibe may find traction in Western markets where sentimentality sells. The real win for investors is that Pop Mart doesn’t rely on one-hit wonders—it nurtures a stable of evolving characters, each backed by robust fanbases.
The Hidden Engine: Operating Leverage and Global Potential
While the market fawns over Labubu, one quiet advantage deserves more attention: Pop Mart’s operating leverage. With gross margins approaching 59% and EBITDA margins over 18%, every new IP or market entry scales with remarkable efficiency. Add to that a current ratio of 4.4 and almost HK$10B in cash, and you have a fortress balance sheet capable of funding long-term growth without debt strain.
Another underappreciated fact: Pop Mart’s revenue per employee clocks in at over HK$1.4 million. This isn't a bloated toy business—it’s a lean IP machine primed for global replication.
So... Is It Too Late?
That depends on your expectations. If you’re hoping for another five-bagger in 12 months, you’re probably late to the party. But if you believe in the long arc of global consumer brands, Pop Mart might still be in chapter two of its story. Its push into North America is just beginning, and it’s hard to think of another Chinese consumer brand with this kind of youth-driven global cachet.
The next leg up may depend on the success of newer IPs like Crybaby or its potential to enter digital gaming and entertainment ecosystems. While the company doesn’t disclose detailed forward P/E guidance, the near 5x leap in annual EPS estimates from FY2023 to FY2025 (HK$0.89 to HK$4.39) signals confidence from analysts—and possibly management too.
Final Thoughts: More Than Just a Toy
$POP MART(09992)$ is not your average toy company. It’s part art curator, part community builder, and increasingly, part cultural phenomenon. At 77 times earnings, the market clearly expects magic. But with a track record of surprise hits, stellar execution, and a scalable model, Pop Mart just might deliver.
I’m not chasing it at HK$199. But should volatility provide an entry closer to HK$170–180, I’d be tempted to collect—not just the toys, but the shares too. Sometimes, the smartest bet in the market is the one that still has stories to tell.
Ideas become icons, and icons become global revenue machines
Would you collect Labubu or Crybaby?
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