Pop Mart reported another year of very strong growth, but investors are beginning to question what comes next. The Beijing-based toy maker posted revenue of 37.1 billion yuan ($5.4 billion) for 2025, up 185% from a year earlier, but slightly below expectations of 38 billion yuan. The market reaction was quick in such a way that shares fell nearly 22% after the results. The stock has already lost about half its value from its August peak, after a long period of strong gains. Net income more than tripled to 12.8 billion yuan, coming in just above forecasts.
Heavy reliance on Labubu
A key issue behind investor concern is Pop Mart’s heavy reliance on its most popular character, Labubu. The Labubu-led Monsters series generated 14.2 billion yuan in revenue, beating estimates of 12.5 billion yuan and accounting for around 40% of total sales. This is a sharp increase from 23% the year before, showing just how central Labubu has become to the business.
Other product lines delivered mixed results. Skullpanda performed well and exceeded expectations with 3.5 billion yuan in revenue, but Crybaby and Molly fell short. Molly, one of the company’s older and well-known characters, generated 2.9 billion yuan, far below the expected 4.6 billion yuan. Regardless of the efforts to build newer characters like Twinkle Twinkle, the results suggest that Pop Mart still depends heavily on Labubu as its main growth engine.
Concerns about sustainability
The slowdown in growth, especially toward the end of the year, has raised doubts about how sustainable Pop Mart’s success is. “a material slowdown in the fourth quarter has amplified investors’ concern on the durability of top IP’s popularity,” said Jeff Zhang, equity analyst at Morningstar. He also noted that the company’s decision to reduce its dividend payout ratio to 25% in 2025 from 35% the previous year added to negative sentiment.
Another concern is that the strong growth seen in recent years may not be easy to repeat, especially if interest in key characters fades. Billy Leung, analyst at Global X ETF, pointed to the ongoing divide in market views to CNBC. “bulls focused on ongoing IP monetization and overseas growth … [and] bears question durability and cycle risk. Earnings did little to close that gap,” he said.
CEO tries to reassure investors
Pop Mart’s leadership has tried to address these concerns. CEO Wang Ning said during the earnings call that “Pop Mart has more than just Labubu,” stressing that the company is working to expand its intellectual property base. He also described the situation as one where expectations have risen very quickly, comparing it to a “rookie racing driver suddenly thrown onto an F1 circuit.”
Labubu’s massive popularity in 2025 helped push Pop Mart into international markets, including the United States, but signs of fatigue are starting to appear. As supply increased and counterfeit products spread, resale prices dropped and the earlier excitement began to fade. This has led to concerns that the Labubu boom may not last.
Push for diversification and new growth
In response, Pop Mart is trying to diversify its business. The company is promoting newer characters and looking to expand its product range beyond collectible toys. It plans to launch home appliances next month and is also working on expanding its Beijing theme park, which is expected to open in the summer. There are also efforts to keep Labubu relevant, including a planned movie with Sony Pictures.
Overseas expansion remains key
International markets are becoming increasingly important for Pop Mart’s growth. The company has been expanding aggressively in the Americas, particularly in the United States, where it added 42 new stores last year. Revenue from the region surged 748% to 6.8 billion yuan, making up 18.3% of total sales. This strong performance shows the potential for global growth, but it also adds pressure on the company to maintain momentum outside its home market. Analysts say that future performance will depend on how well Pop Mart can grow overseas while also building new successful characters.
Looking ahead, the company expects revenue to grow by at least 20% in 2026. At the same time, it has signaled a more cautious approach. “We won’t pursue overly aggressive growth that boosts revenue at the expense of profitability,” Wang said. This suggests that Pop Mart is trying to balance growth with stability as it enters its next phase.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.