Shares of Pop Mart International Group Ltd. fell sharply in Hong Kong trading after a commentary by Chinese state media raised concerns about blind-box toys and trading cards, and called for tighter regulations to protect minors.
The warning, though indirect, sparked investor anxiety over the future of Pop Mart’s flagship Labubu dolls, which are typically sold through blind-box formats.
The commentary, published on the 19th page of the People’s Daily, did not mention Pop Mart by name but criticized aspects of the business model that could lead to excessive purchases among children.
Legal experts cited in the article argued for more refined oversight, pointing to addictive tendencies among young consumers.
Pop Mart’s stock, which had surged nearly 170% this year amid the growing Labubu craze, dropped as much as 6.2% on Friday.
It had already fallen 5.3% the previous day. Shares of Bloks Group Ltd., another maker of collectible toys, also tumbled as much as 7.7%.
State media commentary impacts sentiment as regulatory crackdown fears resurface
The development evokes memories of earlier regulatory crackdowns in China’s tech and gaming sectors, where government interventions over concerns of addiction among minors led to sweeping industry changes.
A few years ago, Beijing introduced time limits for minors playing video games and curbed unsupervised spending, moves that significantly impacted gaming giants.
In 2023, China’s market watchdog had already introduced basic guidelines for blind-box sales, including a ban on sales to children under eight.
The latest commentary is seen as part of an evolving regulatory landscape, though not yet a formal directive.
“The commentary has weighed on investor sentiment, flashing some overheating signs in its business,” said Steven Leung, an executive director at UOB Kay Hian Hong Kong Ltd., referring to Pop Mart.
“Still, it’s a mild reminder as it didn’t come directly from a government official.”
Analysts see limited risk due to adult consumer focus, international growth
Despite this week’s decline, Pop Mart remains the top performer on the MSCI China Index, buoyed by strong consumer enthusiasm for its toys.
Wall Street analysts have continued to raise their price targets, pointing to the rising value and reach of the company’s intellectual property.
Analysts believe the company’s focus on adult consumers and international growth could cushion any regulatory headwinds in the domestic market.
“Concerns about the impact of tighter regulation on Pop Mart may be overdone,” said Morningstar analyst Jeff Zhang.
“Given that the company’s customer base demographic is largely 18 and above, the downside seems limited,” he said.
Zhang also added that a key driver of the company’s growth is likely to come from its overseas markets, so any regulatory clampdown in its domestic market might not pose a significant challenge on its overall growth.
Pop Mart’s 2025 net profit seen doubling due to strong global Labubu demand
The popularity of Labubu — a quirky, toothy monster doll — continues to grow, with a life-sized figure recently fetching over $150,000 at a Chinese auction house.
Last year, when the Labubu frenzy took off, Pop Mart’s shares rocketed 340%.
The company’s profits nearly tripled, and revenue more than doubled.
For 2025, Citi analysts expect net profit to grow 124% and revenue to rise 95%, citing growing global demand and strong intellectual property development.
Citi analysts noted the doll’s expanding appeal in the US and Europe could drive further earnings growth.
In a recent report, Citi raised Pop Mart’s target price to HK$308 from HK$162 and maintained its buy rating.
The bank praised Pop Mart’s ability to build original characters and scale them globally, calling its approach to IP development and product rollout “unparalleled.”
The toymaker, which currently boasts a market value of around $40 billion, expects overseas sales to more than double this year, with overall revenue growth projected to exceed 50%.
For now, despite regulatory murmurs at home, Pop Mart’s global ambitions and adult-focused fan base appear to offer some insulation — and continued momentum — for one of China’s hottest consumer stocks.
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