Breaking Free from Labubu Dependence? Pop Mart’s Q3 Growth Accelerates as IP Diversification Pays Off

TradingKey - After peaking in August, shares of Pop Mart, the maker of the wildly popular Labubu collectible figures, have fallen over 20%, amid concerns that reliance on a single IP cannot justify its high valuation. Now, the world’s leading blind box company is trying to dispel those fears with its Q3 2025 earnings report, showing tangible progress in its push for IP diversification.

According to an announcement released after market close on Tuesday, October 21, Pop Mart’s revenue surged 245–250% year-on-year in Q3 — significantly higher than the 204% growth in H1 and above analyst expectations.

• China revenue: up 185–190% YoY
• Overseas revenue: up 365–370% YoY

Overall, Pop Mart achieved accelerated growth in China, sustained high momentum overseas, and continued expanding both online and offline channels.

On the day before the release, anticipating conservative revenue guidance, Pop Mart’s stock plunged over 8% — its biggest single-day drop since April. On Wednesday, it opened nearly 8% higher, though gains later narrowed.

The Labubu Dependency Problem

The red-hot Labubu series remains central to this earnings story. On one hand, Labubu products are Pop Mart’s top revenue driver — accounting for 35% of total sales in H1 2025. On the other, overreliance on a single character raises long-term risks.

Shuli Ren, Bloomberg columnist, recently argued that Pop Mart is not LEGO or Pokémon — differing in IP dependency, supply strategy, consumer experience, and the balance between social buzz and brand consistency.

Pop Mart leans heavily on the hit Labubu, while IPs like Skullpanda and Crybaby have failed to replicate similar success. In contrast, LEGO maintains a constantly refreshed, diversified lineup — such as its Star Wars series.

Despite pledging to increase restocking, Pop Mart appears to intentionally maintain limited releases or "hunger marketing," leading to persistent shortages, scalper-driven price inflation, and a flood of knockoffs like Lafufu. 

The difficulty in purchasing has created “Labubu anxiety” among fans, sparking backlash over what some call an “IQ tax.” Meanwhile, LEGO ensures stable supply of core sets, allowing collectors to acquire items easily.

Ren noted that social media heat doesn’t always translate into lasting sales. Pokémon peaked in online search interest in 2016, yet last year generated three times more retail revenue than in 2016. LEGO, with 92 years of history, consistently converts online traffic into stable sales — achieving double-digit growth of 13% in H1 2025.

Now, there are signs that Labubu’s social buzz is fading, raising questions about whether its strong sales can continue — especially since much of its demand still relies on artificial scarcity.

Is IP Diversification Working?

In Q3, growth was driven by The Monsters (Labubu) and the Twinkle Twinkle series, pushing overall performance beyond market expectations.

Following the results:

• HSBC raised its target price and profit forecasts for 2025–2027
• Citi increased its 2025–2027 earnings estimates by around 17%
• Goldman Sachs lifted its 2025 earnings forecast by 7%

Nomura Securities said Pop Mart’s strong IP development and operational capabilities are fueling sustained growth. Beyond Labubu, other major IPs have begun to establish distinct identities and target audiences. For example:

• Twinkle Twinkle showed robust sales
• SkullPanda and Hirono have launched more collaborations in recent months

Citi also highlighted that Twinkle Twinkle and other signature IPs are emerging as new growth engines, with recent product launches selling out quickly.

Looking ahead to Q4, both Citi and Goldman Sachs expect the upcoming holiday season to act as a short-term catalyst, with high visibility for continued growth.