Customers browse a POP MART display filled with Labubu characters and collectible figures from The Monsters series on June 16, 2025 in Chongqing, China.
Cheng Xin | Getty Images News | Getty Images
BEIJING — Shares in Labubu-maker Pop Mart continued to tumble Friday, after Morgan Stanley removed the stock from a focus list and state media called for stronger regulation for “blind box” toys.
The Chinese toymaker first gained popularity with its “blind box” concept, in which consumers buy unmarked boxes — which can cost from about $5 to $10 each — for a chance at getting a unique figurine and building a collection.
People’s Daily, the Chinese Communist Party’s official newspaper, on Friday criticized the “blind box” phenomenon, advocating for stricter regulation. The article did not mention Pop Mart by name and focused more on children and young people who were spending heavily on unmarked packets to collect cards.
China’s customs agency this month also highlighted several times on social media how it stopped cases of Labubu copycats from crossing the border.
Pop Mart’s Hong Kong-listed shares were last down more than 5%, extending their slide from the previous session when they had slumped 5.3%. That’s put the high-flying stock on track for its first negative week since early May — with losses of more than 13% so far. Its year-to-date gains stand at over 160%.
Morgan Stanley said in a note late Wednesday it was replacing Pop Mart with insurance company PICC P&C in the firm’s China and Hong Kong focus list.
The investment bank did not elaborate on why it removed Pop Mart shares. The firm on June 10 had raised its price target on the toy company to 302 Hong Kong dollars ($38.47), up from 224 HKD, on expectations that Pop Mart still had room to grow in the long term.
“We think the market has fully factored in Pop Mart’s exponential growth in 2025 but may not have strong conviction on the long-term outlook,” equity analyst Dustin Wei and a team said in the June 10 report.
“That said, in view of its lofty valuation, we do not expect this level of outperformance to continue in the next few quarters,” the report said.
Pop Mart shares hit a record intra-day high of 283.40 HKD on June 12.
The Beijing-based toy company has rapidly expanded overseas with online sales platforms and physical stores, including in the U.S. and U.K.
The Labubu craze
In the last few months, the company’s “Labubu” series of toys featuring an elf-like character have become a global phenomenon, even drawing the attention of fashion and culture-focused New York Magazine and The New York Times.
Pop Mart has also released Labubu stuffed toys, pillows and related merchandise to capture demand. A 4-foot-tall Labubu sold for the equivalent of $170,000 at an auction in Beijing earlier this month. Many of the more affordable versions of the figurine subsequently went out of stock in mainland China.
“We’ve seen certain trends like that before … There seems to always be some cute thing that people have to have,” Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, told CNBC on Friday. The company helps foreign brands — such as Vitamix and iS Clinical — sell online in China and other parts of Asia.
He pointed to interest last year in capybara stuffed toys. Chinese retailer Miniso, which also has stores in the U.S. and other countries, was one of the main sellers of the stuffed animal.
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Cooke saw Pop Mart as “more lucky than anything,” although he pointed out it reflects growing interest in toys not just for children but also adults.
Indicating the soaring popularity of its toys, Pop Mart’s overseas sales in 2024 have already surpassed the company’s overall sales in 2021.
The company reported total sales, primarily domestic, of 4.49 billion yuan ($624.6 million) in 2021. In 2024, overseas sales alone surpassed that to hit 5.1 billion yuan, up 373% from a year ago, while mainland China sales climbed to 7.97 billion yuan.
