Pop Mart’s Labubu Boom Slows as Overseas Sales Fall and 2026 Target Comes Under Pressure

Pop Mart remains profitable and growing, but its first-half 2026 results showed how sharply momentum has cooled since the Labubu-fuelled boom. Revenue increased 23.8% year on year to RMB 17.17 billion, while adjusted net profit rose 9.5% to RMB 5.16 billion. Both the pace of expansion and the earnings outcome were weaker than investors had expected.

Revenue grew, but missed analyst expectations

Pop Mart’s first-half revenue was well below the Bloomberg consensus of about RMB 19.98 billion, which implied 44% year-on-year growth. Adjusted net profit had been expected to reach roughly RMB 5.98 billion before the results.

Reported profit for the period was approximately RMB 5.10 billion, up 8.9% year on year. Gross profit rose 22.6% to about RMB 11.97 billion, but the group’s net margin declined to 29.7% from 33.7% a year earlier.

The result was still positive in absolute terms, but it underscored the difference between continuing growth and the extraordinary expansion Pop Mart delivered during the previous year’s Labubu frenzy. First-half growth had exceeded 200% a year earlier, according to reports cited in the earnings preview.

Overseas sales fell as domestic growth held up

The most important split in the results was geographic. Revenue from mainland China, Hong Kong, Macau and Taiwan increased 47%, while overseas revenue declined 11%.

That contrast matters because overseas expansion had been one of the strongest parts of Pop Mart’s earlier growth story. The company’s 2025 revenue rose 184.7%, with international demand and Labubu playing a major role. A reversal in overseas sales therefore raises questions about whether the character’s appeal is translating into repeat purchases across markets, rather than relying mainly on an initial viral surge.

The reporting also points to weaker Chinese online sales and more cautious investor positioning as part of the market’s concern. However, the available evidence does not establish a single, comparable measure for the increase in short interest, so the scale of bearish positioning should not be overstated.

Why Pop Mart may miss its 20% annual growth target

Chief executive Wang Ning said the company would most likely fail to meet its earlier target of at least 20% revenue growth for 2026. The warning reflects both the difficult comparison with last year’s exceptional performance and pressure in international markets.

Morgan Stanley had already lowered its Pop Mart target price by 13%, from HK$247 to HK$214, citing the high second-half comparison base and slowing overseas sales. Its revised model reduced sales forecasts for 2026 and 2027 by roughly 4% to 5% and cut profit forecasts by about 4%, according to a separate summary of the bank’s estimates.

Other market forecasts were also becoming more cautious. One earlier Morgan Stanley estimate cited by market reporting put 2026 sales growth at 13%, below management’s 20% objective, while the same report said HSBC expected 9.6% growth and Deutsche Bank projected a 2% decline. These are analyst forecasts, not company guidance, and they can change as new results become available.

The market is testing whether Labubu is a franchise or a fad

Pop Mart’s share-price weakness reflects a broader question: can the company turn a viral character into a durable portfolio of intellectual property, or was much of the recent growth tied to a temporary Labubu craze?

Business Times reported that Pop Mart had lost roughly US$32 billion in market value from the peak of the Labubu mania. A separate report described a loss of roughly US$28 billion, illustrating that the exact figure depends on the measurement date and market peak used.

The company has responded by seeking to extend Labubu beyond collectible toys. Pop Mart and Sony Pictures Entertainment announced plans to develop a Labubu feature film, an effort intended to broaden the character’s reach. The company’s wider approach, as described in the supplied reporting, includes theme-park experiences such as Beijing’s Pop Land, collaborations including Disney-Pixar, broader licensing and franchising, more repeat purchases and the development of additional intellectual properties.

Those initiatives could help create more ways for consumers to engage with Pop Mart’s characters. But they also take time to prove themselves. A film, collaboration or new product line does not automatically demonstrate recurring demand, particularly when overseas sales are already declining.

What to watch next

The next test is whether domestic strength can offset weaker international performance without restoring the same dependence on a single breakout character. Investors will likely focus on four signals:

• whether overseas revenue returns to growth;
• whether repeat purchases and newer intellectual properties gain traction;
• whether margins stabilise after the decline in net margin; and
• whether second-half sales can overcome the unusually high comparison base.

Pop Mart also announced a share-repurchase programme of between RMB 2 billion and RMB 5 billion, citing softer domestic sales and normalising demand after the previous year’s strong performance. The buyback may support sentiment, but it does not resolve the underlying durability question.

The first-half results therefore mark a change in the investment debate. Pop Mart is no longer being judged only on whether Labubu can generate another viral spike. It must now show that its characters, channels and entertainment partnerships can produce repeatable growth after the frenzy has cooled.