Goldman Sachs' latest research report provides an in-depth analysis of the cyclical patterns of IP companies, stating that the boom cycle of a single IP typically lasts 2-3 years, and platformization is the way forward. It summarizes three typical patterns of stock price reactions for IP companies, including rapid growth phase, maturity phase, and diversification phase.
On July 29, according to news from the Chasing Wind Trading Desk, Goldman Sachs stated in its latest research report that the popularity cycle of a single IP usually lasts 2-3 years, but companies that establish a comprehensive IP platform can extend the duration of IP popularity, smooth out the earnings cycle at the company level, and achieve more sustainable stock price performance.
Goldman Sachs pointed out that the stock prices of IP companies exhibit distinctly different reaction patterns at different development stages. During the high growth period, they are more driven by high-frequency data rather than profit expectations, while in the maturity phase, they tend to follow profit expectation adjustments. Companies with diversified businesses are less affected by the cycle of a single IP.
Regarding Pop Mart, Goldman Sachs conducted a detailed scenario analysis in its report, believing that in the most optimistic scenario, Pop Mart's long-term revenue potential could reach 81 billion RMB, equivalent to Lego's level. The firm maintains a neutral rating on Pop Mart, with a target price of HKD 260.
Additionally, Goldman Sachs stated in the report that, from a market size perspective, the potential of China's IP toy market is enormous.
<h2>Single IP Popularity Cycle: 2-3 Years is the Norm, Platformization is the Way Forward</h2>
Goldman Sachs' research found that in recent years, the popularity cycle of popular IPs generally lasts 2-3 years. Taking the Chinese market as an example, Ling Na Belle from 2021-2023 and Kuromi from 2022-2024 both follow this pattern. For IPs with continuous series or content generation capabilities, the cycle may be longer.
Goldman Sachs cited the example of Bandai's Gundam IP, which has seen sales growth for five consecutive years, with a compound annual growth rate of 14% from 2020 to 2025, benefiting from diversified monetization methods such as games and movies.
Goldman Sachs summarized four typical stages of the IP popularity cycle, mainly including:
<blockquote>
<ol>
<li>
Launch Phase: IP popularity surges, supply shortages drive up secondary market prices;
</li>
<li>
Growth Phase: Popularity continues to expand, increased supply normalizes secondary market prices;
</li>
<li>
Monetization Phase: Popularity peaks but sales can still grow;
</li>
<li>
Decline Phase: Sales begin to decline.
</li>
</ol>
</blockquote>
At the same time, the report also analyzed the internal and external factors affecting the IP cycle, including:
<blockquote>
Internal Factors: Diversification of product carriers, series operation capabilities, TAM expansion (geographic, customer base, licensing).
External Factors: Celebrity endorsements, media development, rise of short video platforms.
</blockquote>
Goldman Sachs specifically pointed out that the rise of short video platforms and the reduction of content supply provide an opportunity window for non-content IPs.
<h2>Five Key Drivers for Sustainable Growth of IP Companies</h2>
Goldman Sachs believes that companies with IP portfolio operation capabilities can smooth out earnings volatility. The report summarizes five key elements for IP companies to achieve sustainable growth:
<blockquote>
<ul>
<li>Diversification of content forms: Movies, animations, games, theme parks, and other entertainment forms continuously activate IP;</li>
<li>IP portfolio expansion capability: Continuously enriching IP assets through internal development or external acquisitions;</li>
<li>Resource Investment: Stronger investment capabilities and successful merger and acquisition experience;</li>
<li>Monetization Ability: Diversified product categories and licensing business;</li>
<li>Customer Interaction: Specialty stores, membership systems, media platforms, etc., enhance customer stickiness.</li>
</ul>
</blockquote>
Goldman Sachs stated that based on this framework, Disney and Bandai have excelled in building a comprehensive IP ecosystem, demonstrating strong capabilities in various aspects, thereby achieving greater profit resilience.
<h2>Three Patterns of Stock Price Reaction for IP Companies</h2>
Goldman Sachs summarized three typical patterns of stock price reaction for IP companies by analyzing the historical performance of companies such as DeNA, CyberAgent, and Hybe:
<blockquote>
1. In the high-growth phase, stock price turning points often occur when high-frequency data shows signs of weakness, even if profit expectations remain optimistic. The decline in game rankings for DeNA and CyberAgent, and the slowdown in album sales for Hybe, validate this pattern.
2. For mature companies, stock price turning points coincide with downward adjustments in profit expectations. Mattel's Monster High IP faced weak holiday sales at the end of 2013, and the stock price fell along with the downward adjustment in profit expectations.
3. Companies with diversified businesses are less affected by the cycle of a single IP, resulting in more resilient stock price performance. Disney's IP rotation and business diversification, along with Bandai's multi-IP portfolio, reflect this characteristic.
</blockquote>
The research report found that during the deceleration phase, valuations typically correct to a price-to-earnings ratio of 20-25 times.
Goldman Sachs indicated that profit upside is key to re-rating, for example, Pop Mart's valuation corrected when the secondary market premium for Labubu turned negative in December 2024, but rebounded with further profit upside.
<h2>Pop Mart: Growth Potential in the Most Optimistic Scenario</h2>
Goldman Sachs stated that Pop Mart's strong growth in this round is mainly driven by internal factors (optimization of product development processes, category expansion, execution of overseas expansion) and external factors (celebrity endorsements, rising demand for emotional value, short video dissemination).
For Pop Mart, Goldman Sachs conducted a detailed scenario analysis based on IP development, believing that in the most optimistic scenario, if Labubu develops into a global IP and other IPs also expand into diversified categories, Pop Mart's GMV could grow to RMB 129 billion (USD 18 billion), with reported sales reaching RMB 81 billion (USD 11 billion), equivalent to Lego's level.
Goldman Sachs stated that this forecast is based on a price-to-earnings ratio of 20 times/25 times, implying a long-term implied value of RMB 416 billion/RMB 520 billion.
Additionally, Goldman Sachs conducted scenario analysis based on market share, assuming Pop Mart captures 15-20%, 13-20%, 8-15%, and 3-10% market shares in mainland China, Southeast Asia, North America, and Europe respectively, which could realize a long-term revenue potential of RMB 57-79 billion.
Goldman Sachs maintains a neutral rating on Pop Mart, with a target price of HKD 260, primarily based on a 25 times expected price-to-earnings ratio for 2027. The research report emphasizes that the execution capability to build an IP platform remains key to unlocking growth potential and achieving long-term growth
<h2>The Potential of China's IP Toy Market is Huge</h2>
According to research reports, in terms of market size, China's per capita expenditure on IP-related products is 124 RMB (17 USD), which is only 1/17 of North America and 1/4 of Japan, indicating significant growth potential.
Goldman Sachs stated that IP toys are the main carriers of IP, with a market size of 76 billion RMB in China, accounting for 43% of the IP-related products market. If China's average expenditure on IP toys reaches 60%-80% of Japan's level by 2030, it would imply a compound growth rate of 9%-14%

Goldman Sachs stated that, taking the Chinese market as an example, Lingna Belle followed this pattern from 2021 to 2023, and Kuromi from 2022 to 2024. For IPs with continuous serialization or content generation capabilities, the cycle may be longer. The stock prices of IP companies are more driven by high-frequency data rather than profit expectations during high growth periods, while in mature stages, they tend to follow profit expectation adjustments more closely. Companies with diversified businesses are less affected by the cycle of a single IP

- Goldman Sachs' latest report analyzes the cyclical patterns of IP companies, noting that a single IP's popularity typically lasts 2-3 years, with platformization as a key strategy for sustainability.  
- The report identifies three typical stock response patterns during different growth stages and highlights the significant growth potential of the Chinese IP toy market, estimating a long-term revenue potential for Pop Mart at 81 billion RMB.  
- Goldman Sachs maintains a neutral rating on Pop Mart, setting a target price of 260 HKD, emphasizing the importance of establishing an effective IP platform for long-term growth.

Single IP boom cycle lasts 2-3 years, Goldman Sachs summarizes the stock price response pattern of IP companies