Pop Mart In-Depth Investment Analysis: IP Operation System and Long-Term Investment Value Evaluation

Your two core questions are very critical:

1. Can Pop Mart’s IP operation system support it to become a long-term investment target like Tencent Games?
2. Is the logic of its IP matrix strategy to hedge against single IP risk valid?

This will conduct a comprehensive analysis from multiple dimensions such as the nature of the business model, IP lifecycle, financial quality, and risk hedging mechanisms.

• 52-week high
  : HK$335.40 →
  current price
  : HK$200.20
• Retracement from high
  : -40.3% (highly consistent with Bloomberg’s report of “40% stock price crash” [1])
• Maximum retracement
  : -43.6%
• Annualized volatility
  : 56.9% (extremely high volatility)
• Market capitalization
  : HK$265.89 billion (approximately US$34.1 billion)

1. Positive signals
   :
   • Andrew Wu, President of LVMH China, joined the board of directors (December 2025), strengthening the brand’s high-end strategy [2]
   • Q3 2025 revenue surged 245%-250% YoY (China market +185-190%, overseas +365-370%) [2]

2. Negative concerns
   :
   • Disappointing US Black Friday sales, triggering concerns about growth slowdown [1]
   • Cooling demand in the secondary market, with obvious signs of Labubu’s popularity fading [1]
   • Analysts expect revenue growth to slow down in 2026 [3]
   • Everbright analysts even see a drop to HK$100 [3]

Dimension	Tencent Games (Honor of Kings)	Pop Mart (Labubu)
Product form	Digital virtual goods	Physical collectibles
Business model	Free + in-app purchases (sustained monetization)	One-time sales + repurchase-driven
User lifecycle	Long-term (average 2-3 years)	Short-term (popularity cycle 6-18 months)
Marginal cost	Extremely low (close to zero)	Relatively high (production, inventory, logistics)
Network effect	Strong (social fission)	Weak (niche circle)
Content iteration	High-frequency updates (weekly/monthly)	Low-frequency (quarterly/annual)
Competitive barrier	Ecology + data + social relationship chain	IP image + design + channels

: Tencent Games is a , while Pop Mart is a .

Tencent Games’ core competitiveness lies in:

1. Extremely high user stickiness
   : Social relationship chain + in-game sunk cost
2. Sustained monetization capability
   : Continuous launch of skins, heroes, and props
3. Diminishing marginal cost
   : Profit margin continues to increase after scaling
4. Ecological moat
   : WeChat/QQ traffic entrance + payment system

:

• Still maintains strong revenue after 8 years of launch (since 2015)
• DAU stabilizes at 50-100 million
• Annual revenue contribution exceeds US$10 billion
• Quarterly average ARPU (Average Revenue Per User): $50-100

Pop Mart’s business model is more like a hybrid of

:

1. Blind box mechanism
   : Gambling psychology stimulates consumption (5-10 minutes of dopamine release)
2. Social currency attribute
   : Sharing, exchanging, and circle identity
3. Expected collection value
   : Secondary market premium drives primary market consumption
4. IP iteration demand
   : Continuously launch new IP to maintain popularity

: Pop Mart relies on “hotspot-driven” rather than “demand刚需” (rigid demand).

Based on market data [1][2][3]:

• Labubu birth time
  : 2015 (10-year history)
• Boom period
  : 2023-2024 (global trendy toy boom)
• Cooling period
  : Second half of 2025 (US Black Friday weakness + secondary market cooling)

:

• Short-term speculative hype
• Collection value expectation-driven
• Price crash after rapid popularity decline [1]

: Labubu may have passed the boom period and entered the mature or even declining stage.

Factor	Tencent Games	Pop Mart
Continuous content output	✓ (weekly updates)	✗ (quarterly new releases)
Community culture precipitation	✓ (e-sports, UGC)	△ (Xiaohongshu/Douyin)
Cross-media expansion	✓ (animation, film and television)	△ (in trial)
User co-creation mechanism	✓ (MOD, guides)	✗ (one-way consumption)
Depth of emotional connection	Strong (growth memory)	Medium (collection hobby)

: Pop Mart’s IP lacks and is difficult to form cultural symbols like Disney or Hello Kitty.

Based on the company’s operation model [0]:

• Head IP
  : Labubu, Molly, Dimoo, Skullpanda
• Mid-tier IP
  : Newly signed artist IP
• Incubated IP
  : Internal designer team + external cooperation

: Multiple IPs diversify the risk of single IP obsolescence

:

1. Resource allocation problem
   :
   • Labubu contributes over 50% of revenue (estimated)
   • Other IPs are difficult to reach the same popularity
   • Marketing resources are concentrated on head IP

2. IP replication problem
   :
   • Artist styles are difficult to standardize
   • Explosive IP depends on “timing, location, and people”
   • High cold start cost for new IP

3. User fatigue risk
   :
   • Diminishing freshness of blind box mechanism
   • Limited collection space/economic budget
   • Niche user growth reaches ceiling

:

• Even with multiple IPs, Labubu’s cooling still led to a 40% stock price crash [1]
• Indicates that the market believes
  single IP dependence risk has not been truly dispersed

Tencent Games’ IP matrix:

• Self-developed IP
  : Honor of Kings, Peacekeeper Elite, Tianya Mingyue Dao
• Agent IP
  : PUBG, COD, DNF
• Investment matrix
  : Riot, Supercell, Epic

:

• Tencent IPs have
  synergistic effects
  (traffic, technology, user data)
• Pop Mart IPs
  compete with each other
  (user wallet share)

Indicator	Pop Mart	Tencent	Difference Analysis
Market capitalization	HK$265.8 billion	HK$5.48 trillion	Tencent is 20.6 times that of Pop Mart
P/E	35.53x	22.08x	Pop Mart has a 61% premium (high growth expectation)
P/B	16.98x	3.86x	Pop Mart has a 340% premium (asset quality difference)
ROE	54.52%	20.29%	Pop Mart is higher (light asset)
Net profit margin	30.32%	29.93%	Similar
Operating profit margin	40.58%	31.84%	Pop Mart is higher
Current ratio	3.01	1.36	Pop Mart has stronger liquidity

:

• YTD increase: +119.64%
• 1-year increase: +132.79%
• 3-year increase: +910.09% (extremely volatile)
  -5-year increase: +157.82%

:

• YTD increase: +44.95%
  -1-year increase: +44.47%
  -3-year increase: +94.63%
  -5-year increase: +26.03%

:

• Pop Mart is a
  high Beta
  stock (high volatility, high elasticity)
• Tencent is a
  stable blue chip
  (low volatility, sustained growth)

:

• Extremely high ROE (54.52%): Light asset + high turnover
• Excellent net profit margin (30.32%): Strong brand premium
• Healthy cash flow: No debt risk [0]

:

• High dependence on Labubu (single IP risk)
• Whether overseas expansion can continue (365% growth is difficult to maintain)
• Blind box regulatory risk (domestic supervision has been strengthened)

##7. Risk Factors and Uncertainties

###7.1 Core Risks

1. IP obsolescence risk
   :
   • Labubu’s popularity has shown signs of cooling [1]
   • New IP has not yet proven its ability to take over
   • Consumer aesthetic fatigue

2. Valuation risk
   :
   • P/E 35.53x, far higher than Tencent’s 22.08x
   • If growth slows down, valuation will be under pressure
   • Large historical retracement (-43.6%)

3. Business model sustainability
   :
   • Blind box mechanism may be regulated (gambling nature)
   • Consumption downgrade affects non-essential consumption
   • Intensified competition (52Toys, TOP TOY, etc.)

4. Overseas expansion risk
   :
   • Poor US Black Friday performance [1]
   • Cultural differences and localization challenges
   • Geopolitical risks

###7.2 Risk Comparison with Tencent Games

Risk Type	Tencent Games	Pop Mart
Policy risk	High (game version number)	Medium (blind box supervision)
Technological disruption	Medium (VR/AR)	Low (physical products)
User churn	Medium (competitors)	High (aesthetic changes)
IP obsolescence	Low (continuous iteration)	High (fashion cycle)
Competitive barrier	Strong (ecology)	Medium (channels + IP)

##8. Investment Conclusion: Can It Become a Long-Term Target?

###8.1 Answers to Core Questions

1. Different nature of business models
   :
   • Tencent: Platform ecology + sustained monetization + network effect
   • Pop Mart: Product sales + hotspot-driven + no network effect

2. IP lifecycle differences
   :
   • Tencent Games: 8+ years of continuous operation (Honor of Kings)
   • Trendy toy IP: 2-3 year popularity cycle (Labubu is 10 years old, but boom only lasted 2 years)

3. Different moat depth
   :
   • Tencent: Social relationship chain + data + ecology
   • Pop Mart: IP image + channels + brand

:

• The company has multiple head IPs (Molly, Dimoo, Skullpanda)
• Continuously signs new artists
• Internal incubation team

:

• Labubu contributes over 50% of revenue (high concentration)
• Other IPs are difficult to reach the same popularity
• Resource allocation is difficult to balance
• Market validation failure
  : Even with an IP matrix, Labubu’s cooling still led to a 40% stock price crash [1]

###8.2 Valuation and Investment Recommendations

:

• Stock price: HK$200.20 (40% retracement from high)
• P/E:35.53x (still expensive)
• Market capitalization: HK$265.89 billion

:

Dimension	Rating	Explanation
Business model	★★☆☆☆	Lack of moat, dependent on hotspots
Growth	★★★☆☆	High growth but difficult to sustain
Profit quality	★★★★☆	High ROE, good cash flow
Valuation rationality	★★☆☆☆	Too high P/E, implying high growth expectations
Long-term certainty	★★☆☆☆	High risk of IP obsolescence

: ★★★☆☆ (Neutral to negative)

:

1. Long-term value investors
   :
   • Not recommended as core holdings
   • If optimistic about Chinese trendy toys going overseas, can allocate a small position (<5%)

2. Short-term traders
   :
   • High volatility provides trading opportunities
   • Pay attention to IP release cycles and earnings seasons
   • Strict stop-loss (volatility 56.9%)

3. Wait for better entry points
   :
   • If stock price pulls back to HK$100-150 range
   • And new IP proves successful in taking over
   • Overseas expansion continues to exceed expectations

###8.3 Key Observation Indicators

:

1. New IP successfully takes over (non-Labubu revenue accounts for >50%)
2. Sustained high growth in overseas markets (>100% YoY)
3. Successful cross-media IP expansion (animation, games, film and television)
4. Valuation pulls back to below P/E 25x

:

1. Revenue growth <50% for 2 consecutive quarters
2. Decline in Labubu series revenue
3. Tightening of blind box regulatory policies
4. Competitors seize market share

##9. In-Depth Investment Research Recommendations

Given that you are researching Pop Mart, it is recommended to deepen the research from the following dimensions:

1. IP health monitoring
   :
   • Track secondary market price trends
   • Social media discussion热度
   • User repurchase rate data

2. IP matrix quality
   :
   • Revenue contribution ratio of each IP
   • Success rate of new IP incubation
   • Artist signing and retention status

3. In-depth research on overseas markets
   :
   • Specific data on US Black Friday performance
   • Localization strategies in Southeast Asian markets
   • Store efficiency per square meter of direct stores

4. Competitive landscape analysis
   :
   • Performance of competitors like TOP TOY and 52Toys
   • Strategies of international trendy toy brands (Bearbrick, Funko) in China
   • Supply chain and channel advantage comparison

---

: This report is generated based on public data and analysis tools and does not constitute investment advice. Pop Mart’s stock price is extremely volatile (annualized volatility 56.9%), so investment should be made with caution.

[0] Jinling API Data - Financial data, stock price data and company overview of Pop Mart (9992.HK) and Tencent (0700.HK)

[1] Bloomberg - “Pop Mart’s 40% Stock Rout Shows Growing Worry Over Labubu Crash” (December 17, 2025)
https://www.bloomberg.com/news/articles/2025-12-17/pop-mart-s-40-stock-rout-shows-growing-worry-over-labubu-crash

[2] Forbes - “Labubu Maker Pop Mart’s Shares Rise After LVMH China Chief Joins Board” (December 14, 2025)
https://www.forbes.com/sites/forbeschina/2025/12/14/labubu-maker-pop-marts-shares-rise-after-lvmh-china-chief-joins-board/

[3] Forbes - “Chinese Toymaker Mogul Loses Billions As Shares Of Labubu Maker Slide” (December 22, 2025)
https://www.forbes.com/sites/ywang/2025/12/22/chinese-toymaker-mogul-loses-billions-as-shares-of-labubu-maker-slide/

[4] Yahoo Finance - “LVMH’s Andrew Wu Joins Labubu’s Maker Pop Mart as Nonexecutive Director” (December 2025)
https://finance.yahoo.com/news/lvmh-andrew-wu-joins-labubu-145155242.html

[5] Bloomberg - “Pop Mart Shares Plunge 8% as Sales Concerns Fuel Short Bets” (December 8, 2025)
https://www.bloomberg.com/news/articles/2025-12-08/pop-mart-shares-plunge-8-as-sales-concerns-fuel-short-bets