To The Moon

On October 22, $POP MART(09992)$ released its Q3 2025 business update, reporting a year-on-year revenue surge of 245%–250%, reaching a record high. Founder Wang Ning’s optimistic forecast back in August — “achieving RMB 30 billion in revenue this year will be easy” — now seems well within reach.

However, the market has ignored the upbeat earnings news, and the stock continued to break lower.

Why the drop?

1. From a news perspective, Pop Mart was hit by its first short-seller report, setting a target price of HK$225.

2. From a technical standpoint, the chart shows a head-and-shoulders pattern, with the neckline around HK$229.

3. In terms of valuation, the market still considers Pop Mart overvalued, with growth unlikely to be replicated. The stock has now fallen below key support, trending downward, with the next target level near HK$200.

When should you sell due to fundamental deterioration?

Looking ahead, Pop Mart is likely to expand into picture books, animation, and film production. But the content industry carries high risk, and not every project can meet expectations.

1. Operational or product flaws evolve from isolated incidents to recurring issues — for example, frequent product quality problems, declining aesthetic or operational capability, and consecutive flops in film projects. Such patterns would trigger widespread consumer backlash, damaging brand image and IP value.

2. Shift in management philosophy — for instance, if the leadership stops valuing long-term operations or shareholder returns, neglects IP lifecycle management, or begins over-monetizing IPs and making irrational capital allocations for short-term gain.

For now, Pop Mart’s fundamentals have not truly deteriorated.

When is the right time to bottom-fish?

After continuous declines, its P/E ratio has dropped to 37, close to the industry average of 34.

In November, Pop Mart will participate in Macy’s Thanksgiving Parade in the U.S., promoting IPs beyond Labubu.

Although Labubu has cooled in the secondary market, the company seems unconcerned, continuing to restock it — and each plush restock still sells out instantly. Domestic demand remains strong, and overseas demand still holds growth potential.

After today’s 5% drop, the RSI 14 has fallen to 28.92. Unless new bearish signals emerge, HK$200 would be my entry level.