By Sabrina Escobar

They're small. They're furry. They're creepy (possibly cute?). And they're everywhere, giving its parent company, Pop Mart, a massive boost to sales, profit, and share price.

Labubu monster plush toys and figurines have become the must-have accessory of the year. Their popularity skyrocketed in 2024 after K-pop artist, Lisa Manobal, was seen with a Labubu toy clipped to her purse. Since then, other A-list celebrities, from Rihanna to Dua Lipa, have been spotted toting a Labubu, egging on the craze among younger consumers.

Labubus are sold exclusively by Pop Mart, a Chinese-based retailer that is growing at breakneck speed worldwide. The toys were created by Hong Kong artist Kasing Lung in 2015, inspired by Nordic mythology. In 2019, he partnered with Pop Mart to fabricate the monster line, which has gradually permeated the fashion scene.

To date, Pop Mart has rolled out over 300 monster models that come in different sizes and colors, some of which are sold on Pop Mart's online store for as much as roughly $300. The most popular are the keychain plushies that come in "blind boxes" that retail for just under $30 in the U.S. Shoppers don't know what style they're getting until they open the box, the surprise adding an element of excitement to the purchase. Rare editions are resold for hundreds, if not thousands, of dollars.

Consumers have the option of buying a Labubu at just under 100 destinations across the country, a mix of permanent stores, pop-up stores, and vending machines. Worldwide, the company operates over 500 stores in over 30 countries and regions.

The Labubu fad has been a boon to Pop Mart. On Tuesday, the company said it expected revenue for the six months ended June 30 would increase by no less than 200% compared with a year prior, while profit for the period would jump by no less than 350% year over year. The company posted revenue of 4.56 billion Chinese yuan ($635 million) the same period last year, and 964 million yuan in profit ($134 million).

Pop Mart attributed its surge in sales and profit to increased global recognition of its brand and intellectual property.

Pop Mart's stock, which is listed on the Hong Kong stock exchange, has soared about 180% this year alone, and is up a whopping 570% over the past 12 months. The company now commands a market cap of about $43 billion, far outstripping American toy companies Hasbro and Mattel, which are valued at $10.49 billion and $6.29 billion, respectively.

Shares have pulled back over the past month, down 8% on investor concerns that the trend may be reaching a peak. Indeed, in a years' time, the company may find it hard to lap the success of the current craze. The company, which is seeking to grow in North America, may also struggle with the new tariff regime that places high levies on Chinese imports (the bulk of its products are made in China).

But bullish analysts believe both the company and stock still have room to run.

Lina Yan, an analyst at HSBC Global Research, argues that the company can continue to ignite consumer interest in its brands by launching new series and toys. Aside from Labubu monsters, Pop Mart has about a dozen other characters it can base toys off to keep driving demand, Yan added. She rates the stock a Buy.

This is especially true if the launches focus on Pop Mart's key markets, such as Thailand and other Asian countries, where roughly three-quarters of its 2024 revenue stemmed from. The stores' popularity outside of the U.S. presents an inherent hedge against higher tariffs.

Plus, given the recent pullback, the valuation is now attractive, wrote Lydia Ling, an analyst at Citi, in a Tuesday note. Pop Mart trades at about 32 times the next 12 months' earnings, according to FactSet, slightly below the last 12 months' ratio of 35 times earnings.

"Valuation has been attractive after recent share correction, providing enhanced entry opportunity," Ling wrote. "We expect positive share performance on the profit alert."

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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July 17, 2025 00:01 ET (04:01 GMT)

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