A FinancePick Deep Dive
The Phenomenon in Context (Fact Check)
- IP & Creator: Labubu is part of The Monsters universe, created by Hong Kong artist Kasing Lung, and commercialized globally by POP MART (HK: 9992) through blind box collectibles.
- Financial Impact: POP MART’s growth in 2024–2025 has been fueled heavily by The Monsters/Labubu series, which contributes significantly to revenue on a semi-annual and quarterly basis.
- Product Expansion: Beyond plush toys and figurines, the brand has launched mini Labubu versions (phone accessories, keychains) to capture broader markets.
- Social Buzz: Secondary market prices have surged, with celebrity exposure amplifying consumer demand.
- Risk Signals: Counterfeit products (“Lafufu”) are spreading, raising safety and authenticity concerns. Discussions around blind box regulation and age restrictions are also ongoing.
Two Main Investor Pathways
A) Equity Play – Leveraging the IP Growth via POP MART Stock
Rationale:
- IP Concentration: The Labubu/Monsters lineup is a revenue driver, and new releases (mini & collaborations) expand product pipelines.
- Global Expansion: International sales are accelerating in 2025, improving geographic diversification and reducing valuation discounts.
Due Diligence Checklist:
- Break down revenue by IP and growth rates in financial reports.
- Assess margin structures (royalties, merchandising mix, digital channels).
- Monitor policy/regulatory changes (blind box rules) and counterfeit crackdowns.
Risks:
- Hit Dependence: Over-reliance on one IP; new product misses could swing earnings.
- Hype Risk: Valuations may overprice short-term consumer trends.
- Reputation/Policy Risk: Regulations on blind boxes or safety issues could cut demand.
Practical Tips:
- Position Sizing: Limit exposure to ≤5% of total assets.
- Hedging: Use peer indexes or toy sector exposure for partial beta neutrality.
- Trigger Map: Reduce exposure if (i) quarterly revenue growth slows, (ii) major product failure/recall, (iii) regulation intensifies.
B) Collectibles Play – Secondary Market for Figurines/Plushies
Return Drivers:
- Scarcity: Limited editions, sell-out speed, and narrative-driven releases.
- Condition: Premium for mint-in-box, factory sealed.
- Special Editions: Collaborations and event exclusives fetch higher resale premiums.
Risk Management:
- Authenticity: Verify holograms, QR codes, UV seals.
- Liquidity: Thin order books may cause steep drops; use limit orders over market orders.
- Diversification: Hold at least 3–5 editions across series, hedge FX risk (USD/HKD).
Portfolio Role:
- Keep collectibles at 5–10% of total assets as an alternative investment.
- Focus on diversification, not just chasing appreciation.
Macro-Cycle Scenarios
- Continued Hype
- Overseas adoption + mini Labubu mainstreaming boost ASP and turnover.
- Action: For equities, use trailing stop rules (–15%). For collectibles, sell one-third to lock profits.
- Normalization
- Resale premiums shrink, new product variance widens.
- Action: Stay neutral in equities, hold only top-condition or strong-story collectibles.
- Headwinds (Regulation / Recalls / Reputation Risk)
- Age restrictions or safety recalls cool the market.
- Action: Scale down equity exposure, prioritize liquidity in collectibles.
Investor’s Pre-Hype Checklist (10 Questions)
- Have you reviewed POP MART’s IP-level revenue breakdown?
- Are overseas sales and new categories (mini, accessories) accelerating?
- Have you compared valuation multiples (P/S, EV/EBIT, FCF)?
- Have you accounted for regulatory risks on blind boxes?
- Do you have an authenticity verification process (QR/hologram/UV)?
- Have you included fees, shipping, and tariffs when calculating resale returns?
- Is collectible exposure capped at ≤10% of assets?
- Do you have predefined triggers for rebalancing?
- Are you relying too heavily on celebrity/social media hype?
- Do you maintain adequate buffers in cash and bonds?
Journalist’s Conclusion
Labubu is more than a passing fad; it has become a cultural and commercial phenomenon that anchors POP MART’s financial results. Yet with hype comes risk: fads fade, regulations tighten, and counterfeits proliferate.
The balanced investor approach:
- In equities: keep sizing disciplined and react to triggers.
- In collectibles: emphasize authenticity, liquidity, and diversification.
Ride the hype, but don’t depend on it.