The year of the Labubu revealed the ‘new consumption’ trend among China’s Gen Z—and now it’s spreading overseas

Pop Mart has emerged as a blockbuster Chinese consumer story in 2025: the Beijing-headquartered blind-box toymaker reported RMB 13 billion in revenue and RMB 4.5 billion in net income for H1 2025, up >200% and ~400% year-over-year respectively, with Labubu accounting for roughly one-third of sales. The shares have surged >125% YTD (despite a 40% fall from peak and a near-RMB 15.5 billion / $2.2 billion intraday market-cap hit after a viral salesperson livestream), giving a market cap of about $37 billion and lifting founder Wang Ning’s net worth to ~$18 billion. Management warns of uncertain durability of the craze even as Pop Mart expands to 570+ international stores and earns ~40% of revenue outside Greater China—raising questions about sustainability of growth, investor positioning, and whether the business can transition from hit-driven IP to a broader lifestyle platform.

Analysis

Market structure: The immediate winners are Chinese IP-native consumer-discretionary retailers (Pop Mart and peers) and platforms that monetize collectibles, while legacy Western toymakers (HAS, MAT) face incremental share pressure in low-/mid-price segments. Pop Mart’s H1:2025 scale (13bn CNY revenue, 4.5bn CNY net income; Labubu = ~33% sales) gives pricing power short-term but concentration risk—market cap ~USD37bn implies expectations for sustained global conversion. Supply-demand is currently tight for “rare” variants (secondary prices fell recently), signaling a fragile demand-supply balance that can flip quickly if supply increases or fad fades.

Risk assessment: Tail risks include a regulatory clampdown on blind-box mechanics (consumer-protection/anti-gambling rules), IP litigation abroad, or rapid inventory offload causing margin collapse; any of these could compress valuation by >40% within weeks. Time horizons: immediate (days) volatility from social-media shocks; short-term (weeks–months) driven by holiday season, celebrity endorsements, and earnings cadence; long-term (1–3 years) depends on successful diversification beyond one IP. Hidden dependencies: influencer-driven demand, secondary-market liquidity, and manufacturing concentration in China; catalysts that could reverse trend include film/theme-park flops or new regulation announced within 30–90 days.

Trade implications: Favor selective exposure to Chinese IP/retail for 6–12 months but hedge event risk. Tactical pair: long Pop Mart exposure vs short HAS/MAT to capture secular share shift; use options to limit downside around earnings/holidays. Sector rotation: trim US toy/commodity-exposed names and reallocate to Asia consumer, leisure, and financials that benefit from cross-border retail flows.

Contrarian angles: Consensus underestimates two outcomes—durable globalization of Chinese IP (driven by lower-cost production + digital storytelling) or a classic bubble reversion if scarcity is monetized away. Historical parallel: Beanie Babies shares the viral element but differs in vertical IP control and global retail footprint; however, aggressive global expansion can dilute scarcity and trigger a severe multiple contraction if rare variants flood the market.

Key Decisions for Investors

• Establish a 2–3% long position in Hong Kong-listed Pop Mart (or a China consumer discretionary/IP-focused ETF if Pop Mart is inaccessible) for a 6–12 month horizon; target +30–50% upside if revenue growth sustains, and institute a 20% stop-loss or exit if Labubu falls below 20% of group sales or secondary-market avg price drops >30% month-over-month.
• Initiate 1% short positions in HAS and MAT each (tickers: HAS, MAT) as a 3–12 month pair trade against Chinese IP longs; profit target 15–25% and hard stop at 12% adverse move—reason: secular share shift in low/mid-price collectible segments and valuation asymmetry.
• Allocate 0.5–1% to volatility trades: buy 3–6 month ATM straddles on Pop Mart where available (or 3–6 month call spreads on a China consumer discretionary ETF) ahead of holiday/earnings windows to monetize event-driven swings; cap premium at 1% portfolio and exit on 30–50% premium decay or post-event.
• Buy HSBC (ticker: HSBC) 1.5–2% long to capture increased cross-border retail flows and listing/M&A advisory upside in Hong Kong over 6–12 months; target +8–12% and place a 12% stop-loss to limit banking-sector and macro risk.