Pop Mart Q3 revenue drops 50%, wiping out 30% of annual value

Pop Mart shares extended their decline on Wednesday after the company confirmed that third-quarter revenue fell by half. The stock, which trades under the ticker for the maker of Labubu dolls, has lost more than 30% of its value since the start of the year.

In a filing released on Tuesday, the firm stated that revenue for the third quarter dropped between 45% and 50% compared to the same period last year. This performance missed analyst expectations. Jefferies noted that the results were weaker than the 30% decline the market had forecast, though they aligned with projections from buy-side investors. The brokerage lowered its earnings estimates for Pop Mart for 2027 and 2028 by 9% to 12% in response to the data.

The financial hit was most severe outside mainland China. Revenue in the Americas shrank by 70% to 75% year over year. Sales in the Asia-Pacific region fell by 65% to 70%. Europe and other regions posted declines of 50% to 55%. Even in the company's home market, mainland China, revenue dropped by 25% to 30%. These figures suggest the initial surge in demand for collectible toys has cooled significantly across key international markets.

Trading on Wednesday was volatile. Shares fell more than 6% in early trade before recovering some ground, ending the session down by less than 2%. The stock has finished lower in nine of its last 12 trading sessions, indicating sustained pressure from investors who question the longevity of the collectible toy trend.

Jefferies projects a modest improvement for the final three months of the year. The brokerage expects fourth-quarter revenue to rise 3% from the previous quarter, although it will remain 34% below the level recorded a year earlier. The firm points to pressure on profitability stemming from softer overseas sales as a key factor in its revised outlook.

Pop Mart is continuing its global retail expansion despite the slowdown. The company is placing greater emphasis on flagship stores in cities including New York, Milan, and Paris. It is also working to broaden its lineup of intellectual properties beyond Labubu. Brands such as SKULLPANDA, Hirono, and Twinkle Twinkle are gaining traction in overseas markets as the company attempts to diversify its revenue streams.