The frenzy surrounding Labubu dolls has cooled in recent weeks, halting one of the world's fastest stock rallies and erasing billions of dollars from Pop Mart International Group's valuation.
Pop Mart's shares dropped almost 9% in Hong Kong, the steepest fall since April, after analysts downgraded the stock over its overheated valuation. Despite the pullback, the company's shares remain up more than 180% since the start of 2024, leaving room for recovery if momentum returns.
The downgrade by a Wall Street bank followed signs that demand for Pop Mart's flagship doll was waning. Once a must-have for celebrities including Rihanna, David Beckham and Lisa from the K-pop group BlackPink, Labubu is losing ground in the Chinese market.
Pop Mart's market cap has shrunk by almost $13 billion, roughly a quarter of its value, since peaking on Aug. 26, according to Bloomberg data.
The decline comes after Pop Mart shares quadrupled earlier this year, fueled by a surge in Labubu's popularity across Asian markets and its expansion into the West.
To counter the slowdown, Pop Mart plans to launch an animated series and a new version of Labubu ahead of Christmas, and is also preparing to introduce interactive toys, according to analysts at JPMorgan.
Labubu was first created in 2015 by Hong Kong-born artist Kasing Lung, who now lives in the Netherlands, as a character in his children's book Monsters. Pop Mart introduced the toy in physical form in 2019. In recent months, it has become a global sensation, selling in large volumes worldwide.
