For most of the year, Labubu behaved less like a toy and more like a financial signal. Queues formed at dawn, resale premiums validated the line, and scarcity converted curiosity into compulsion. However, that flywheel has slowed, as the latest drops arrived in a market that feels saturated and more rational, with access easier, resale incentives weaker, and casual buyers perfectly happy to wait. Sentiment flipped fast enough to drop about $6 billion from Pop Mart’s valuation while trimming Wang Ning’s net worth by nearly the same magnitude, a reminder that the stock’s multiple was doing as much work as the income statement.
Why The Heat Faded
The story changed because the inputs changed. When supply normalizes, the aura of rarity dissipates, and the secondary market ceases to value immediacy. That alone resets behavior, but the context mattered too. Policy optics in China have shifted against promotions that appear to be speculative, prompting brands to steer clear of gimmick-adjacent distribution. At the same time, aesthetic sameness across successive iterations made each new colorway feel less like a chapter in a world and more like a merchandising trick. None of this kills demand; it simply transforms it from mania to maintenance, which is the most difficult phase for any craze-born business.
Strong Results, Softer Multiple
Operationally, Pop Mart continues to open flagship stores, roll out Robo Shop vending, and expand its distribution overseas. Financially, that scale still supports growth. The equity market, however, is paying for repeatability rather than reruns. The re-rating reflects the concentration risk in a single IP and the recognition that engineered scarcity cannot sustain pricing power indefinitely. In this new regime, investors will reward a portfolio that consistently produces hits without relying on the Labubu template.
The average selling price became a story, and scarcity was the supplier that effortlessly told that story. The next phase demands visible value, leveraging artist credibility that justifies their existence, craftsmanship cues that are legible at arm’s length, collaborations that add cultural equity rather than logo noise, and retail theater that earns a visit without promising a flip. If the price is perceived as earned rather than extracted, unit economics can remain intact even as the frenzy subsides.
From Phenomenon to Slate
Pop Mart is, at heart, an IP studio wrapped in a specialty retailer, and by doing so, manages risk through a slate of distinct worlds; retailers win through cadence and discipline. The company’s task is to seed new aesthetic universes that do not resemble Labubu derivatives, to pace releases so that anticipation replaces fatigue, and to be selective about partnerships that can explain why a particular object must exist at this moment. The trick is not to repeat Labubu’s playbook everywhere but to prove there are other playbooks.
Outside China, the art-toy category remains a journey of discovery. That creates room to grow, but exporting a craze is not the same as exporting a brand. The translation must prioritize story first and scarcity second, with sell-through driven by belonging to a world rather than by fear of missing a line. The practical test will be straightforward: do first-time buyers in Europe and the United States return without an event-style drop to prompt them, and does non-Labubu revenue take a larger share without total sales stalling?
The $6 Billion Lesson
The magnitude of the markdown signals that markets had been paying for optionality on endless hype. That option has been repriced, and the company still possesses the assets that matter: capital, infrastructure, distribution, and an audience that craves surprise. What it needs now is surprise that travels and endures. If the next few quarters deliver one genuinely new world, a cleaner release cadence, and overseas cohorts that buy again absent a frenzy, today’s reset will look less like a ceiling and more like a necessary middle chapter.
Success will be a calmer curve, resembling a healthy sell-through velocity without spectacle, a measured shift away from Labubu without a revenue dip, gross margins protected by visible quality rather than a scarcity tax, and international repeat behavior that proves the brand can stand on culture, not on adrenaline. In short, Pop Mart does not need to abandon its bunny; it needs to outgrow it and not rely on another fast trend.
