Behind the 'crushing' of short sellers lies the revaluation logic of Pop Mart (9992.HK)

At the start of 2026, Pop Mart achieved success on multiple fronts:

On the capital front, the company spent approximately HKD 3.5 billion on buybacks and cancellations on January 19 and 21. On the product side, the launch of the 'Knock Knock Fun' series in January, featuring electronic wooden fish sound effects and stress-relief tags, quickly topped the热搜 (trending search) list. Shortly after, the Valentine's Day exclusive 'Star People Heartbeat' series, the first Valentine’s Day-themed product for Star People, sold out immediately upon release.

Amid these multiple positive developments, Pop Mart's share price continued to rise, increasing by about 26% from its low point on January 19.

This rebound in share price was not accidental but rather the result of a dual logic resonance between 'capital-level buyback boosting confidence' and 'business-level IP operation gaining recognition.' This not only confirmed the market's reassessment of the company's valuation but also highlighted its strong capabilities in coordinating IP operations with capital maneuvers.

1. Buybacks demonstrate confidence, clarify misunderstandings, and reinforce share price support.

Two large-scale buybacks within just three days—swift and resolute—marked Pop Mart's first repurchase operation since early 2024, directly signaling to the market that its current valuation is undervalued.

Against the backdrop of a continuously adjusting share price and market skepticism about the sustainability of IP popularity, the substantial buyback not only reflected the company's firm confidence in its long-term development but also practically addressed market concerns.

Several brokerage firms quickly followed up with commentary. Morgan Stanley noted in its research report that this buyback could attract more investors who are waiting for share price catalysts. Huatai Securities maintained its 'Buy' rating, believing that Pop Mart has strong growth, clear drivers, a well-defined long-term strategy, and that the sustainability of earnings growth and medium-to-long-term potential have been significantly underestimated.

Reviewing the share price trend since the end of August 2025, Pop Mart experienced a round of continuous adjustment, which starkly contrasted with the robust performance reported during the same period.

One of the core reasons for this inverted phenomenon is that the market forcibly tied the stock price to the secondary market price of LABUBU. Some short-sellers took advantage by purchasing out-of-print LABUBU items at high prices on secondary platforms, then dumping them en masse at lower prices to create panic over 'waning IP popularity,' thereby profiting from short-selling the stock. This maneuver led many investors to mistakenly equate fluctuations in secondary market prices with declines in IP value, overlooking the company's true operational fundamentals.

In fact, the market has a serious misunderstanding regarding the scarcity logic of Pop Mart.

Unlike other trendy toy brands that rely on 'limited releases' to create scarcity, Pop Mart's sense of scarcity stems from the inherent appeal of its IPs: by continuously amplifying IP popularity to expand its fan base, it creates a 'tight supply-demand balance'.

Leveraging its strong control over distribution channels, Pop Mart adopts a 'dynamic release' model. This model ensures an optimal purchasing experience for regular consumers while fulfilling the collecting needs of hardcore fans, achieving a balance between 'mass accessibility' and 'scarcity'.

Second, the resurgence of Pucky and the rise of new IPs validate the robust platform-based IP operation capabilities.

The popularity of Pucky and Starry People exemplifies Pop Mart's IP operation capabilities.

As an older IP that had been 'dormant' for many years, the Pucky percussion series sold out immediately upon release, with topic views on social media platforms breaking one million.

Pucky's resurgence was no accident but rather supported by two key factors.

On the one hand, the product accurately captured societal sentiment: the percussion series innovatively integrated a 'wooden fish' interactive gameplay, aligning perfectly with young people's need to relieve work-life stress and seek emotional comfort and healing, becoming a 'stress-relief gadget' with inherent viral qualities.

On the other hand, this success would not have been possible without the platform’s sustained operational investment: Pop Mart never abandoned its deep cultivation of mature IPs, injecting new vitality into Pucky through product innovation, marketing rhythm management, and fan ecosystem maintenance. This also validates the development logic that 'IP enterprises may experience ups and downs, but they are the most resilient businesses.'

It is evident that a temporary 'dormancy' of an IP does not signify a loss of value but rather a phase of adjustment. In the fast-iterating trendy toy industry, reviving mature IPs through innovations that meet contemporary demands demonstrates stronger operational prowess than simply incubating new IPs. The case of Pucky proves that Pop Mart’s IP operation is not a 'one-off deal' but rather a continuous process of rejuvenation throughout an IP's lifecycle, significantly enhancing the risk resistance of the entire IP portfolio.

If Biqi's resurgence proves Pop Mart's ability to revitalize old IPs, then the sudden rise of the new IP, Little Stars, answers the industry's long-standing question of 'who will be the next LABUBU,' also demonstrating Pop Mart's strength in discovering and incubating IPs as well as its powerful IP star-making capabilities.

Within less than a year of its launch, Little Stars has joined the ranks of IPs generating over a hundred million in revenue, becoming one of Pop Mart's fastest-growing IPs. JPMorgan even predicts that 'Little Stars' will contribute 8% of Pop Mart’s sales by 2027, up from just 2.8% in 2025.

In fact, obsessing over 'who will be the next LABUBU' is not particularly meaningful. Each of Pop Mart's IPs has a unique positioning: LABUBU's healing vibe, Biqi's cute style, and Little Stars' warm attributes, each covering different consumer groups and emotional needs. $POP MART (09992.HK)$

What truly matters is the platform-based system behind it that can continuously incubate innovative IPs: providing traffic support, premium channel resources, and mature fan ecosystem endorsements for new IPs, helping them quickly penetrate the market; while reserving room for old IPs to refresh, extending their lifecycle through product iteration and cross-brand collaborations, eventually forming a virtuous cycle of 'continuous emergence of new IPs and timely revitalization of old IPs.'

Multiple institutions have recognized this advantage. Huatai Securities pointed out that Pop Mart's 'growth driven by diverse IPs might exceed expectations'; Shenwan Hongyuan Securities believes that from the perspective of IP design, operations, and supply chain, Pop Mart is the most competitive company globally and can achieve long-term IP value through effective operations; China Merchants Securities considers that the diversification of IPs and product categories, flexible supply chain, and outstanding IP and store operation capabilities, combined with the relatively early stage of store expansion in the Americas and Europe, give Pop Mart the potential to navigate trend risks.

The resurgence of Biqi and the rise of Little Stars both point to a core conclusion: Pop Mart's IP operations are not a 'flash in the pan' but possess a stable ability for long-term incubation and value extraction.

This capability does not rely on the luck of a single blockbuster but stems from its platform-based business model—Pop Mart has never been a trendy toy company solely dependent on a single IP but rather a complete closed loop of 'IP incubation + operation + monetization,' which is its strongest industry barrier.

III. Conclusion

Recent market changes feel more like a 'correction' in perception. More investors are gradually realizing that Pop Mart's core competitiveness does not lie in the short-term popularity of a certain blockbuster IP but in its platform-based IP operation capabilities, precise control over the IP lifecycle, an irreplicable industry position, and keen insight into consumer demands and market sentiment.

In the future, with the continuous improvement of its IP ecosystem and deeper penetration into overseas markets, Pop Mart's long-term growth potential is worth anticipating.

For Pop Mart, this reevaluation is just the beginning.

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