The Labubu Economy

In this podcast, Motley Fool analysts Emily Flippen, Sanmeet Deo, and Asit Sharma unpack the collectibles economy and the anatomy of a craze. They chat about who actually wins when crazes hit the market, evaluate the value of owning or licensing intellectual property, and wrap up with a lightning round of stocks they'd use to play a craze.

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This podcast was recorded on Sept. 16, 2025.

Emily Flippen: Today on Motley Fool Money, we're breaking down the collectibles economy and how businesses turn plastic into profit. I'm Emily Flippen, and today I'm joined by analysts Sanmeet Deo and Asit Sharma to discuss the latest craze in the industry of collectibles. Labubus. Along the way, we'll dig into how the Hype cycle has helped perpetuate these fads and explore the successes and failures of previous collectible manias to help evaluate how investors should best play it. But to start, let's clarify the anatomy of what a craze is. Sanmeet, you've lived through more than one craze, and regardless of what industry it is, you said there's always some similarities. Now, before we get into exactly what a Labubu is because I'm still not sure I know. What actually is a craze, and how is that different than just like a sustainable trend?

Sanmeet Deo: Craze is really an intense collective impulse that burns incredibly bright, often for a very short time. Think of it like a flashfire in consumer marketplace spreading virally before quickly burning itself out. We've seen it time and time again with Beanie Babies in the 90s, fidget spinners a few years ago. The driving force of this is really a powerful cocktail of human psychology. You have FOMO our desire for novelty, and the simple need to feel part of the group. Today's craze has become more sophisticated as companies pull on specific levers to build the hypes such as gamefication of buying, engineers scarcy exclusivity, community, and character and aesthetic design.

Emily Flippen: When I think about what defines a craze personally versus something that's maybe more sustainable, it's like that desire that you just mentioned that almost capitalizes on our human nature to not want to miss out on things. There's always these little, I don't know if to call it gamifications, but elements that are almost taking advantage of human psychology where if you feel like you're not participating, you are actively falling behind.

Sanmeet Deo: Absolutely. They're not just a transaction anymore. Like you said, it's a game. They're creating a dopamine hit from a reveal like you would in a blind box where you're like, What am I going to get? And you open it up and you're like, Wow, this is what I wanted or Wow, this isn't what I wanted. Companies release limited editions and collaborations, creating a sense of urgency to buy. Then you have social media, which is rocket fuel, which causes even more hype. None of this really works unless you have an appealing product, a cute, lovable toy character like Hello Kitty or adorably ugly character like Labubu. It's really about creating an emotional connection with those products.

Emily Flippen: I always struggle with that difference between what is technically cute and what is technically ugly and Labubus unfortunately fall into that middle ground for me, although maybe a little bit more to the latter. Asit, speaking of things that may be a little bit cuter than a Labubu, but something that we all maybe fell for back in the late 1990s, that is the Beanie mania. But is there really when you look at the industry, something fundamentally different about the market for collectibles or crazes in 2025 versus even just a handful of decades ago?

Asit Sharma: Emily first, I want to protest. I never fell for Beanie mania. [LAUGHTER] Kidding, kidding. I actually did. For a short time, I did. Well, when I look back through the lens of craze and fads, I think the entire collectible cycles has sped up over the last three decades. Consumer psychology, that's not changed one bit. For instance, if we look at the time it takes for someone to come up with an idea all the way to distribution, that time frame has shrunk dramatically due to the ease of designing a product these days, contracting with a third party to manufacture it and marketing it. Hello, viral algorithm. Also drop shipping has become so simple. I also note that the average length of a craze or fad is so compressed. The craze portion of the Beanie Babies fad lasted four years, Emily, 1995-1999. That would count as insane longevity in today's world. Also past decades had a really difficult playing field for creators. It's more level now. You don't have to be Pop Mart cheap tech tools are there for the three of us to start our own fad. I hope you guys will join me, and we can facilitate these profits by employing those blind box strategies, and of course, using the phenomenon of Chinese drop shipping. Although today now we might have to be paying a little bit of de minimus tax on that shipping.

Emily Flippen: Hey, with these crazes as crazy as they are, I think a lot of people may be willing to do exactly that. But outside of just the existence of these fads, what else have you noticed? Because the world is very different today than it was in the past. With the Internet being one good example.

Asit Sharma: Right, the Internet has made a more formalized economy out of the collectibles system. So we have these exchanges like stock. Where, Emily, you can buy me a pair of Jordan I OG Chicago 1985 for 45,000 bucks right after we finish taping today.

Emily Flippen: Sure.

Asit Sharma: I'll take one, too. Throw one in for Sanmeet. Digital collectibles. That's also a newer feature of the landscape. Although NFTs really haven't fulfilled their early hype, they're showing some staying power within a smaller group of enthusiasts, which brings us to the rise of subculture collectibles. TikTok, Reddit, Pinterest, Instagram, you name it. Every major platform facilitates a collectibles culture for small groups of like minded enthusiasts. There is a craze for everyone, even for me, I won't name the one that has obsessed me, but the way that we buy and trade these objects we obsess over really reflects our current plug in culture.

Emily Flippen: I know that a lot of our listeners are probably thinking to themselves, that's exactly what I'm doing with a Labubu right now. Stick with us because up next, I will finally get to what a Labubu is and why so many people are interested in collecting them. We'll see you after the break.

Labubus. It's a word that perhaps mean absolute nonsense to many of our listeners, but to others, I think it probably invokes excitement. In my case, I think it invokes a lot of skepticism. Of course, that is my core personality trait. But this is a plush that has become incredibly popular owned by a Chinese IP giant known as Pop Mart. Calling it cute to our earlier point, I think is being perhaps a bit generous. But regardless of what you think about how Labubus look, people are increasingly demanding on collecting them, whether that be for prestige, FOBO or a potential rise in value. Sanmeet when you think about Labubus and the parent company that owns Labubus and Pop Mart, is this, I guess, a trend of fashion? Is it even investable, or is this truly just our next craze?

Sanmeet Deo: Well, Pop Mart, while many may think is just a toy company, it's actually really an intellectual property company. They are the ones that own the Labubu brand. They worked with the creator Kasing Lung. They were traditionally the license IP of known characters, and then they've transitioned more into essentially acting as the whole design, marketing, production of these properties. So by owning the property, IP like Labubu, Molly, Skullpanda, are the ones that they have. They aren't paying massive licensing fees. In 2023, their propriety IP accounted for over 80% of the revenue, which is a huge shift from the early days when they were just licensing and products. They have a multi channel sales model of 500 plus stores and more than 2000 robo shops, which are basically high tech vending machines where you could just get a Labubu as if you were to get a coke, they're planning on aggressively opening in the US, Europe, Middle East. They're making a name for themselves.

Emily Flippen: For investors who are looking to ask themselves. Well, maybe I don't want to own a Labubu. I want to own shares of Pop Mart. This is a company that is based in China. It is listed on its main stars on the Hong Kong exchange, but it does trade over the counter here in the United States under the ticker PMRTY. Now, personally, I would hesitate against telling anybody to buy shares of Pop Mart today because I see how much shares have run up and I also can't help but think to myself that surely Pop Mart and Labubus is just a one hit wonder, right, Sanmeet.

Sanmeet Deo: I think it's just a one hit wonder. The company actually only makes 35% of the revenue from actual Labubus or that product line. They have three other brands, which each of them make about 1 billion in RMB and revenue each. They're expanding into new categories like plush toys and other things. But their revenue has been explosive. Their growth has been explosive. Revenue has gone from 2.5 billion RMB in 2020 to over 6.3 billion RMB in 2023 to 13 billion RMB in 2024. Now they're running at a 13.9 billion run rate in 2025 over the first half. They're profitable. They've grown to close to 4.7 billion in RMB over the first half of 2025. That's 363% over the last half year over year. The stock too, has been a rocket ship. Just over the past year to date, it's been up over 200%, resulting in a $43 billion market cap, making that eight times bigger than Mattel and four times bigger than Hasbro. Will it all last? I think they could successfully expand the world of Labubu beyond just collectible figures into storytelling, animation, games. If they can do that, then they can create something valuable. I'll leave you with one brand that we know very well, Hello Kitty, and how it expanded from just being one character to a cultural phenomenon. I didn't even know this, but it's one of the highest grossing media franchise in history with an estimated 80 to $90 billion in lifetime retail sales. Will that happen for Pop Mart and Labubus Not sure. Can we predict it? Absolutely not.

Asit Sharma: You know, Sanmeet, you've laid that out so well. Pop Mart, for me, is an example of both the opportunity in this market and it's crazy driven cyclical nature. Pop Mart was an early adopter of this blind box strategy that we talked about, not knowing what's in the box until you buy it. I think out of those 500 stores you mentioned they had maybe 300 by the 2010. They had thousands of vending machines, the snazzy online presence in China, that sort of mapped out for them all their sales and distributions and logistics channels. They were pre built right in time for the first big craze that they capitalized on, which was the Molly craze of 2016. This was a concept by Hong Kong designer Kenny Wong. Now, even though it creates IP alongside designers like Kenny Wong, Pop art has a very traceable flow of ebbing, peaking, ebbing again, inventory. At the end of the day, it's extremely hard to consistently capitalize on craze driven collectibles, which I think is a little bit of the hesitancy I hear in Emily's voice. Both trend observers, I'll note and ethologists who are people who study the animal kingdom, the behavior of animals, refer to the breaking of a stampede or craze as the turnabout or the reversal. Already, I think we see some evidence that the Labubu craze to pronounce Labubu the way Emily did, is fading. Stock price has come off those great highs. There are many stories in the press that sales are faltering a bit. Now, I do think Pop Mart has a great opportunity to use this windfall from Labubu to invest in new properties. Their cash balances have doubled in short order to about 12 billion RMB since the beginning of this craze, which is just over a year's length and time, although inventory and tables have increased also. While the shine has faded somewhat from earlier crazes that they made good money off of like Molly and Skullpanda, those have become reliable and evergreen brands. To me, what comes next is the question, and that's always the question with collectibles companies. The ones that are seeking to spike interest through initial scarcity and that blind box demand.

Emily Flippen: Your positivity from both Asit and Sanmeet it's reassuring to me. I love the comparisons here to the other licensed IP plays that have succeeded. Hello Kitty, who has created an entire brand around a single character. I do have a tendency as an investor to let these things go and be hyper focused on what could go wrong as opposed to what could go right. But there is still some part of me that can't help but think Funko Pop. Funko Pop, Funko Pop when I look at this business and there's a difference there, like you mentioned some between the licensed IP versus the owned IP. But fads come and go so quickly and I have historically done such a poor job of predicting if and when that dam will break. Up next, we're moving over to past crazes and what investors can learn from them. Stick with us.

Now when we think about collectible crazes, we've already talked a little bit about Beanie Babies. But there's countless others. Pokémon, Funko Pops, which I just mentioned, and even sneakers are other good examples. But even knowing that fads are inevitably going to die out. I mean, Sanmeet do you really think there's an effective way for an investor to play the industry and actually make money?

Sanmeet Deo: I mean, it's a tough industry, outside of buying the originator of the craze, like Pop Mart for Labubus, which is highly risky and possibly not recommended, there's some diversified ways, if you're investing Mattel or Hasbro, sometimes some of their franchises start to revive, think Barbie, and do well. They also have a portfolio brand, so you're not subject to one hit wonder risk. Obviously, there's also the picks and shovels way where you can invest in marketplaces where these things are sold in the secondary market like eBay, Etsy or other popular places. Sometimes the retailers Target, Walmart, big retailers sell some of these products. They get a short term bump in sales, although it may or may not have much of impact on their massive amount of sales. So it's a difficult place to invest in, but definitely worth exploring what's out there.

Emily Flippen: I worked on our Cannabis portfolio here at The Fool. When I thought about allocation, it's a similar mindset to what you just mentioned Sanmeet, which was I was not opposed to getting some direct exposure to these businesses that were highly risky, very fatty, could go to zero or go to 100, so to speak. But at the same time, mixed it with businesses like Home Depot and others that made a more diversified safe portfolio. I love that way of playing it if somebody is looking to capitalize off these fads, but also maybe doesn't want to potentially overexpose themselves. But Asit, I already expressed how I feel about the Pop Marts of the world. It's caused me to out on hundreds of percentage points over return, surely, you have a more positive take on the industry than I do.

Asit Sharma: Well, Emily. I'm going to be completely honest here. Let's avoid these types of businesses. There are much easier places to invest. I personally haven't found a lot of success playing this industry. For the companies that deal in physical goods, there's usually a lot of excess inventory to work off once a craze dies down. This makes stock investments in collectible businesses just like a bumpy ride. For models that lean toward licensing, remember, there's a cost to procuring intellectual property and trademarks that are going to generate revenue, especially if the deals are exclusive. Build the IP like Pop Mart, if you can. At any rate, all these companies have to be pretty good at identifying the right brand properties. You've got to nail product and distribution, not to mention the timing to capitalize on a craze with your inventory and your sales channels. To do this consistently is just such a tall order. Emily, I'm having deja vu of sending you a slack. Late one workday saying, man, I am so interested in this company Funko. I think it's got the perfect formula between inventory and licensing its intellectual property. It's got a great warehouse, automated systems. This is going to be the next big collectibles thing. I recommended that in a service, and I think sold out of it, maybe nine months later. As Sanmeet mentioned, marketplaces may be the better place to look. Buy the company that gets a cut out of every collectible transaction. Gamblers and stock traders already familiar with this concept, the house always wins.

Emily Flippen: You set me up nicely here, Asit, for my lightning round last question before you wrap up today's podcast. That is, if you were going to play this trend, which collectible or craze stock you would buy in order to play it? I'm happy to start. It's in that similar vein that both of you mentioned, although maybe a little more out there. This is a Chinese company known as Bilibili. The taker is B-I-L-I. This is an old rulebreakers recommendation that was actually sold a number of years ago. But this is a marketplace or video streaming place, I suppose for Gen Z consumers in China. You can imagine it like a hybrid between TikTok and YouTube, it doesn't directly benefit, so it's much more of the picks and shovels play. They aren't actually a marketplace in the sense of where you trade or exchange Labubus so to speak. But it does benefit from having a really young audience who tend to be the people who benefit and hype up these types of craze trains, and the stock has done incredibly well as engagement on the platform has soared. I guess I'll pop to you, Sanmeet. Are you popping in on Pop Mart?

Sanmeet Deo: No, I mean, look, in honor of our rule breaker Nss, Pop Mart is one of those names that if you make it a small speculative position, a broader portfolio, it could be worth trying to try to risk it, but I wouldn't take a big bet on it. What I would do is picks and shovels, which I love to play, and the ultimate for this is eBay. They are the world's marketplace. It's almost like a great secondary market for any kind of collectibles, comics, plush toys, anything you can think of high volume, deep ecosystem, authenticiy, you're safe and secure in your payments and dispute resolution. It's a great place to go to buy and sell these things. Another place is another play is Meta because lots of marketplace secondary markets are being done on their marketplaces section and it's growing in volume and interest. The tickets for those are eBay, E-B-A-Y and Meta, M-E-T-A.

Emily Flippen: The great tickers that match exactly their name. Asit, I'm looking at my show notes here and I think I know the company you're going to mention who also has a ticker that matches its name.

Asit Sharma: Company that's already playing around the margins of the collectible space with its exclusive deals on high end watches for some of its affluent members and wildly popular deals on gold bars. Yeah, you guessed it. This is Costco, symbol C-O-S-T. I think management has realized that they have a very powerful new revenue stream. They can direct a lot of dollars in member interest toward the exciting thing of the month. What is that but a collectibles type of trend. Now, Costco is selling about $200 million in precious metals to its membership every month. You can see the power of directing this purchasing power at something new in the future. I think we're going to see more of this. Next stop the famous Costco $1.99 pizza slice in plush toy format. You heard it here first, guys.

Emily Flippen: One of those I can't eat and one of those I can. I think I know where I'm going to first. But I do think the value of these pick says a lot about this industry and it's similar to how Labubus go crazy or whatever the fad is, and there's a feeling of missing out. I think for investors who will look at the performance of a business like Pop Mart or other collectibles, Funko Pop during its heyday, will say to themselves, I'm missing out. I have to get in on this. I have to jump in. As we know from the inevitable downfall of these crazes, oftentimes there's also an inevitable downfall of the parent company who owns these craze as well. I love the idea that sure that might be interesting, risky but small investment for the right investor. But at the same time, there's so many other more diversified, more stable ways that somebody can get a little bit of exposure and build their portfolio to benefit from this trend while not being dependent upon the trend, as well. Sanmeet and Asit, thank you both so much for joining for today's show.

Sanmeet Deo: Thanks a lot, Emily.

Asit Sharma: Thank you, Emily.

Emily Flippen: As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance contents follows the Motley Fool editorial standards, and it's not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Sanmeet Deo, Asit Sharma, and the entire Motley Fool Money team, I'm Emily Flippen. We'll see you tomorrow.

Asit Sharma has positions in Costco Wholesale, Etsy, and Funko. Emily Flippen, CFA has positions in Bilibili and Home Depot. Sanmeet Deo has positions in Walmart. The Motley Fool has positions in and recommends Costco Wholesale, Etsy, Home Depot, Meta Platforms, Target, Walmart, and eBay. The Motley Fool recommends Hasbro. The Motley Fool has a disclosure policy.