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Pop Mart shares declined by the most since April on Monday as fears mounted that the success of Labubu, its toothy-grinned furry elf doll, was running out of steam.
The Hong Kong-listed shares of the Beijing-based toy company fell nearly 9 per cent in early trading — the biggest intraday drop since just after US President Donald Trump’s “liberation day” tariffs announcement in April — before paring losses to be down about 7 per cent.
The declines took the stock’s losses to more than 10 per cent since last Monday, though it is still up more than 180 per cent year to date.
Pop Mart’s stunning stock market rally has made it one of the world’s most valuable toy companies, with a market capitalisation more than double that of Hasbro and Mattel combined, even after the recent dip.
Much of its success has been due to the global popularity of Labubu, an ugly-but-cute doll that has earned endorsements from celebrities including David Beckham and Rihanna.
But analysts have warned that the success of Labubu risked leaving the company reliant on a possibly transient trend, and say the company needs to continue to release popular new characters to sustain its valuation, now about 29 times one-year forward earnings.
Additional reporting by William Sandlund in Hong Kong