Pop Mart Shares Slide on Reports of Waning Labubu Reseller Demand

Investor sentiment toward Pop Mart International Group Ltd (PMRTY) has turned more cautious after media reports suggested waning reseller demand for its Labubu toys, a shift that could be weighing on expectations around the brand's momentum. Shares of the Hong Kong-listed toymaker fell as much as 6.2% on Tuesday, making it one of the weakest performers on the MSCI Asia Pacific Index, after reports said some scalpers had paused buying amid sharp price swings in China's secondary market that may be signaling softer appetite.

The selloff adds to a broader slide that began in August, which has seen the shares drop by about 44% and more than $25 billion in market value erased, even as the stock remains more than double higher for the year and is valued at roughly four times peer Sanrio Co. Data from toy resale platform Qiandao show average prices for full sets of mini Labubus and the Big Into Energy series have fallen below official retail levels, while softer pricing and indications of weaker-than-expected overseas holiday sales have possibly intensified concerns about the durability of Pop Mart's recent rally.

With investor worries lingering that the product buzz around Labubu may be cooling, the company is leaning on other intellectual property characters to potentially replicate that success, including its Crybaby line, which held an exhibit in Shanghai this month, as well as its Twinkle Twinkle and Hirono dolls. Some investors could also be rotating out China's new consumption names to lock in profits, according to Morningstar analyst Jeff Zhang, as declines in Laopu Gold Co. and Mixue Group on Tuesday point to broader pressure across the theme.