From Labubu to Ne Zha: Toy Craze Powers Pop Mart’s Market-beating Stock Rally

Fresh from their success with Labubu, Pop Mart International are on another hot streak in intellectual property (IP) merchandising as consumers snap up their toys based on China’s highest-grossing Ne Zha 2, leading US investment bank Morgan Stanley to name the stock among their top picks. 

Pop Mart’s Ne Zha toys sold out days after their release on January 30 as the animation blockbuster grossed more than $1.152 billion and on Monday entered the top 30 global box office chart as the only non-Hollywood film. And also the first non-Hollywood film to enter the Top 10 of the global animation box office list. [Refer my February 09, 2025 post "Ne Zha 2 Box Office Surpasses $1B in China Alone"]. 

The frenzy is a repeat of Pop Mart’s success in capitalising on their Labubu toys, a toothy but adorable elfin beloved by millions of Asian fans. [Refer my December 26, 2024 post "Labubu, The Must-have Made-In-China Toy"]. 

The formula helped propel their sales outside mainland China and fan a 350 percent rally in their stock in Hong Kong last year. 

“We expect Pop Mart to become one of the go-to partners for global major IP owners that intend to monetise and extend IP popularity through IP toys”, Morgan Stanley analysts including Dustin Wei and Carol Xia wrote in a report. Their success underlines their influence in the IP strategy, they said. 

Third-party IPs like Ne Zha only counted for 15 to 20 percent of Pop Mart’s revenue, but they helped the brand gain new customers effectively, the analysts added. 

Morgan Stanley expect a strong upgrade in the company’s earnings this year, after they jumped 70 percent from a year earlier to 3 billion yuan in the first half of 2024, according to their stock exchange filing. Revenue from outside mainland China grew 260 percent to 13.5 billion yuan, or almost 30 percent of the total. 

Pop Mart’s Ne Zha toys are being sold on Xianyu, a second-hand goods trading platform, for as high as 180 yuan versus their retail price of 69 yuan. Pop Mart have adjusted their production schedules to meet demand for their toys, according to local media reports on Thursday. 

Labubu toys are also in short supply after a speculative fervor last year. But the prices have weakened as Pop Mart stepped up production to improve brand accessibility and fan experience.