Pop Mart’s meteoric rise is facing its sharpest test yet as the company’s flagship Labubu figurines show signs of entering a dangerous speculative cycle. According to Bernstein analyst Melinda Hu, whose bearish stance stands in stark contrast to overwhelming market optimism, the frenzy around the razor-toothed collectible echoes the hype that inflated — and ultimately destroyed — the Beanie Babies bubble. As Pop Mart’s shares slide and investor anxiety deepens, the central question is whether the toy maker can pivot in time to avoid becoming a victim of its own success.

Speculative Dynamics and Cracks in the Frenzy

Hu argues that the “scarcity, the hunt, the dopamine hit and the secondary market” surrounding Labubu signal a market driven less by sustainable consumer loyalty and more by short-term hype. The parallels to the 1990s Beanie Baby mania — when limited releases and frenzied bidding turned toys into speculative assets before the market collapsed — are becoming uncomfortably clear.

The warning comes at a fragile moment. Pop Mart’s shares have fallen more than 30% from their August peak, a reversal intensified by a viral livestream incident in which an employee appeared to question the pricing integrity of a blind-box item. Even after a stunning 1,500% rally from early last year, the stock’s sharp decline suggests investor sentiment may be shifting from euphoria to skepticism.

Notably, short interest has climbed to its highest level since April 2024. That positioning signals that a growing cohort of traders is betting on further downside — an unusual move for a stock that analysts almost unanimously rate as a buy.

Labubu Dependence and Growth Sustainability

The core concern is Pop Mart’s rising dependence on a single intellectual property. Labubu and its broader “Monsters” series now account for 35% of total revenue, up from 14% just a year ago. That concentration increases vulnerability in the event of a demand slowdown, especially if enthusiasm proves fleeting.

Bernstein forecasts that annual revenue growth will peak at 145% this year before moderating as margins come under pressure from higher marketing costs and global expansion initiatives. For now, Hu is holding firm on her long-term price target, despite shares already slipping below it — a sign she expects more volatility ahead.

Supporters of the stock highlight the company’s global runway and emerging franchises. JPMorgan points to “Twinkle Twinkle” as an authentically growing IP that could reach 8% of sales by 2027. But Hu remains doubtful that any alternative lineup has demonstrated the independent pull needed to shoulder a larger share of future growth.

Looking Ahead: Sustainability or Speculation?

The broader debate centers on whether Pop Mart can transition from a hit-driven business to a diversified global brand portfolio akin to Sanrio’s Hello Kitty or Mattel’s Barbie. Hu argues the fundamentals are not comparable: enduring global icons rely on accessibility and ubiquity — not scarcity mechanics and dopamine-driven purchasing.

As investors weigh the company’s next chapter, the path forward hinges on proving that Pop Mart’s success is not a speculative bubble but the foundation of a durable consumer brand universe. The coming quarters, and the performance of emerging IPs, will be pivotal in determining which narrative prevails.