When growth can no longer support valuation, the myth must be rewritten.
Following POP MART's announcement of its H2 2025 performance, the company's stock price plummeted by over 22% in a single day. Three major investment banks—Goldman Sachs, Morgan Stanley, and UBS—simultaneously lowered the company's earnings forecasts and target prices, officially marking the start of Wall Street's repricing of the &#34;high-speed growth&#34; narrative created by Labubu.
The latest financial report data shows that POP MART's revenue in H2 2025 increased by 174% year-on-year to RMB 23.2 billion, and net profit increased by 272% to RMB 8.2 billion, both falling short of Goldman Sachs' expectations by 8% and 10% respectively.
The core source of the earnings gap is the overseas market—year-on-year growth in the Americas in the second half dropped from over 1265% in Q3 to 633%, while Europe and other regions fell from above 735% to 436%, both significantly missing expectations. Impacted by this, the stock price fell by approximately 22% to 23% in a single day on March 25, while the Hang Seng Index rose by 1% over the same period.
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The three major investment banks subsequently took action. Goldman Sachs lowered its earnings forecasts for 2026 to 2027 by 18%, significantly slashing its 12-month target price from HKD 300 to HKD 184, and maintained a Neutral rating. Morgan Stanley lowered its revenue forecasts for 2026 to 2027 by 4% to 5% and net profit forecasts by approximately 4%, reducing the target price from HKD 325 to HKD 278, while maintaining an &#34;Overweight&#34; rating and its Top Pick status. UBS lowered its adjusted net profit forecasts for 2026 to 2028 by 7% to 13%, adjusting its target price from HKD 326 to HKD 278, with its Buy rating unchanged.
The consensus among the three institutions is that the overseas expansion engine is cooling, and short-term growth fluctuations will exacerbate stock price volatility, but the long-term value of the IP ecosystem can still support fundamentals. The core of the market debate is whether the slowdown in growth is a temporary phenomenon due to active operational adjustments or the arrival of an IP cycle inflection point after the peak of Labubu's phenomenal popularity.
<h2>Overseas Market Deceleration, Performance Below Expectations Across the Board</h2>
In H2 2025, POP MART achieved total sales of RMB 23.244 billion, a year-on-year increase of 174%; net profit was RMB 8.201 billion, a year-on-year increase of 272%. The figures remain impressive, but the problem is that both were approximately 8% to 10% lower than Goldman Sachs' previous expectations.
From a regional perspective, the Greater China region (including mainland China, Hong Kong, Macau, and Taiwan) outperformed expectations, with a year-on-year increase of 134%, exceeding Goldman Sachs' forecast by about 5%; the Asia-Pacific region was largely in line with expectations, with a year-on-year increase of 123%. However, the performance of the two core overseas markets was a major disappointment:
<blockquote>
Americas Market: Year-on-year growth of 633% may still seem like an astronomical figure, but the growth rate in Q3 was as high as 1,265%-1,270%, indicating a sharp sequential deceleration and falling about 14% below Goldman Sachs' expectations;
Europe and Other Regions: Year-on-year growth of 436% also showed a significant slowdown from the 735%-740% growth in Q3, missing Goldman Sachs' expectations by 66%.
</blockquote>
Actual overseas sales were RMB 10.675 billion, compared to Goldman Sachs' previous expectation of RMB 13.231 billion, a gap of 19.3%. The net profit shortfall was also partly due to the drag from foreign exchange losses.
In communications with investors, Goldman Sachs pointed out that the market reaction primarily reflects concerns about growth deceleration, especially third-party data showing a continuous slowdown in the US market year-to-date, as well as IP/product cycle risks.
Morgan Stanley stated that data from third-party channels shows growth in the US market has continued to slow further so far this year, which is one of the key drivers behind the shift in investor sentiment toward pessimism.
<h2>Divergence Among Three Investment Banks: Varying Downgrade Magnitudes and Rating Stances</h2>
Despite facing the same below-expectation results, the three investment banks diverged significantly in their adjustment intensity and rating stances.
Goldman Sachs made the largest adjustments. Analyst Michelle Cheng's team lowered the 2026-2027 earnings forecast by 18%, based primarily on three judgments:
<blockquote>
First, new product prices in the US market face downward pressure due to lower tariff rates;
Second, high raw material prices create pressure on gross margins;
Third, the slowdown in overseas expansion weakens operating leverage.
</blockquote>
In terms of valuation, Goldman Sachs lowered its target P/E ratio from 20x to 15x and switched its valuation benchmark to one standard deviation below Disney's 10-year historical average, drastically cutting the 12-month target price from HKD 300 to HKD 184, representing only about 9.3% upside from the current price of HKD 168.3. The rating remains Neutral.
Morgan Stanley's stance is noticeably more optimistic.
Analyst Dustin Wei's team, after lowering 2026-2027 earnings by about 4%, reduced the target price from HKD 325 to HKD 278 and the target P/E from 26x to 23x (corresponding to a PEG of approximately 1.3x based on a 22% CAGR for EPS from 2025 to 2027), but maintained an &#34;Overweight&#34; rating and kept POP MART on its list of top picks.
Morgan Stanley believes that the current 2026 P/E of approximately 14x is undervalued, and the company &#34;continues to expand its share in an ever-growing global IP collectible market,&#34; while business adjustment efforts in 2026 are expected to further enhance competitiveness in 2027-2028.
UBS's adjustment was also relatively moderate.
The firm lowered its adjusted net profit forecasts for 2026-2028 by 7% to 13%, with a larger cut to overseas forecasts but an upward revision for domestic forecasts. The target price was lowered from HKD 326 to HKD 278, and the Buy rating remains unchanged, viewing the current valuation as attractive.
There were also some differences in 2026 revenue forecasts: Goldman Sachs predicted RMB 44.9 billion (up ~21% YoY), Morgan Stanley predicted RMB 45.9 billion (up ~24%), and UBS predicted approximately RMB 45.0 billion (up ~21%).
While the three major investment banks collectively lowered their forecasts, significant divergence appeared in their assessments of POP MART's medium-to-long-term prospects, reflecting a deep-seated market tug-of-war:
Goldman Sachs chose Disney's historical valuation as an anchor, believing that the current growth slowdown warrants a compression of valuation multiples, and the uncertainty of the near-term IP/product cycle makes the risk-reward ratio for overweight positions limited, thus maintaining a &#34;Neutral&#34; rating; Morgan Stanley stands by the long-term narrative of &#34;expanding share in the global IP collectible market,&#34; likening it to an early-stage combination of &#34;Sanrio + Bandai + Lego + Disney&#34; and considering the current valuation undervalued; UBS, from a fundamental growth perspective, is bullish on the resilience of the Chinese market and maintains a &#34;Buy&#34; rating.
<h2>Management Sets the Tone for 2026: Consolidation Prioritized, Prudent Expansion</h2>
The signals released by management at the earnings conference call were overall cautious, proactively positioning 2026 as a &#34;year of operational consolidation and organizational optimization.&#34; Following high growth in 2025 that far exceeded their own expectations, the company is intentionally slowing down to solidify the foundation for sustainable healthy growth.
Regarding core performance guidance, the company has set a target for 2026 revenue growth of no less than 20%, while committing not to sacrifice profitability. Due to uncertainties in raw material costs and logistics expenses, specific gross margin guidance has been postponed until the May quarterly business update. The company also announced a new mechanism for quarterly business updates every May and November to enhance operational transparency.
Morgan Stanley specifically noted in its research report that management has proactively delayed the rollout of the Labubu 4.0 series and the opening of New York flagship stores (Times Square and Fifth Avenue), believing that the relatively conservative growth targets for 2026 are partly due to the company's proactive management rather than simply a slowdown in market demand.
In terms of operational layout, the domestic market focus will shift to store renovations, with the number of planned renovations exceeding that of 2025, along with the opening of several new flagship stores (management stated that stores upgraded in 2025 saw double the efficiency with area increases of 30% to 50%).
Overseas, management plans for US store counts to exceed 100 in 2026, while also targeting white-space markets in lower-tier cities, popular tourist destinations (such as Pattaya, Bali), and international hub airports (such as Narita, Doha).
Notably, for the full year of 2025, overseas online channels' share exceeded offline stores for the first time. Management stated that the high proportion of online sales in the US primarily reflects operational pressure on offline channels; in the long run, the offline share is expected to recover gradually, but 2026 may still be dominated by online sales.

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Goldman Sachs, Morgan Stanley, and UBS have simultaneously lowered POP MART's earnings forecasts and target prices. The consensus among the three institutions is that the overseas expansion engine is cooling, and short-term growth fluctuations will exacerbate stock price volatility, but the long-term value of the IP ecosystem can still support fundamentals. The core of the market debate is whether the slowdown in growth is a temporary phenomenon due to active operational adjustments or the arrival of an IP cycle inflection point after Labubu's phenomenal popularity peaked

- Bubble Mart's stock plummeted over 22% following its disappointing 2025 H2 earnings report, prompting major investment banks to downgrade profit forecasts and target prices.  
- The company's revenue grew 174% year-on-year to ¥232 billion, but this fell short of Goldman Sachs' expectations by 8-10%, mainly due to declining overseas market performance.  
- Analysts expressed mixed views on the long-term outlook, with some citing ongoing overseas expansion challenges, while others remain optimistic about the company's IP ecosystem and growth potential in the Chinese market.

Labubu Myth Shattered? Overseas Growth Below Expectations, Three Major Investment Banks Simultaneously Downgrade POP MART's Target Price