Labubu manufacturer has lost a quarter of its market value due to the decline in the hype around dolls

Shares of Chinese toy maker Pop Mart fell by almost 9% in Hong Kong after JPMorgan downgraded the company due to weak demand and unattractive valuation. About writes Bloomberg.

Thus, the decrease in the hype around Labubu dolls led to the biggest drop in the company's shares since April. Nevertheless, Pop Mart shares are still up more than 180% since the beginning of the year and remain the top performer on the Hang Seng Index.

"We believe that the valuation is ideal, and any slight deviation from fundamentals/negative media reports (e.g., falling resale prices and third-party licensing) could lead to a downside," JPMorgan analysts said.

From the peak in August Pop Mart lost about $13 billion, or a quarter of its market value.

In 2024, the company's stock more than quadrupled, driven by the popularity of Labubu dolls, and this month the company was added to the Hang Seng Index and Hang Seng China Enterprises Index.

Currently, the company's shares are trading at almost 23 times the projected earnings for the next 12 months.

Pop Mart plans to release an animated series and a new version of Labubu before Christmas, as well as interactive toys. However, JPMorgan analysts believe that the effect of these launches is still difficult to predict.

Overall, the share of positive recommendations for Pop Mart shares fell to 91%, the lowest level in the last year.

• In early June, in China a rare Labubu toy was sold for $150,000.
• During June 19-20, Pop Mart lost almost $4 billion in capitalization after being criticized in the Zhenmin Zhibao.