Shares fall despite massive sales growth in the US in the third quarter

Shares of the Chinese toy maker Pop Mart It fell 9% on Thursday, marking the stock’s worst day since April and extending its declines since its peak in late August.

The company behind the popular Labubu dolls, a series of collectible monster dolls that come in blind packaging, reported Tuesday that third-quarter revenue more than tripled year over year with U.S. sales swelling between 1,265% and 1,270%.

However, fears are growing that the craze may be fading away.

Data from Chinese resale platform Qiandao shows that some Labubus products are selling near or below Pop Mart’s official retail prices, a stark shift after a period of high demand and prices. For example, the Labubu Luck figure, released in April, saw its resale price soar to more than 500 yuan, or about $70, at one point. But this has since dropped to 108 yuan, or about $15, according to Qiandao.

Since August, Pop Mart stock is down 30%, but it’s still up 159% so far this year.

Analysts are divided on how to explain the contraction.

One line of thinking is that falling resale prices could signal a slowdown in enthusiasm for LaBobo and other collectibles after the summer peak, especially among younger, non-traditional toy buyers. Another possibility: The decline may reflect Pop Mart’s efforts to increase supply and curb speculation, rather than declining consumer demand.

Pop-Mart has reported a tenfold increase in the supply of luxury toys this year and said it now makes nearly 30 million units each month, the company told Reuters on Tuesday.

Morgan Stanley “Prices in the used goods market do not effectively reflect the true supply and demand situation,” analysts noted in a note to clients in September, particularly in light of Bob Mart’s initiatives to reduce the influence of distributors.

The LaBobo dolls’ popularity has been boosted by celebrity fans including singer Rihanna and former football star David Beckham. However, Labubus isn’t the only Pop Mart product catching the attention of non-traditional toy buyers.

Emerging figures like Twinkle Twinkle and global expansion opportunities continue to play a key role in driving Pop Mart’s growth, Morgan Stanley analysts noted.