On September 8, Chinese toy manufacturer Bubble Mart saw its stock price plummet by 7.11%, resulting in a market capitalization loss of 29.545 billion Hong Kong dollars. Despite being included in the Hang Seng Index that day, this positive news failed to reverse the downward trend. The pressure on the stock price stems from the continuous decline in the secondary market prices of its core toy, Labubu. Experts suggest that Bubble Mart is experiencing an irrational bubble which could lead to self-weakening prices and continued decline.
Bubble Mart Cultural and Creative Limited Company in Beijing saw its stock price drop by 8.85% during trading on September 8, closing at 287.6 Hong Kong dollars per share, with a daily decline of 7.11%. Its market value shrank by 29.545 billion Hong Kong dollars compared to the previous trading day. On that day, the Hang Seng Index Company announced the inclusion of Bubble Mart in the Hang Seng Index, effective immediately. However, this adjustment failed to boost the stock price.
Since reaching a historical high of 339.8 Hong Kong dollars per share on August 26, Bubble Mart’s stock price has retreated by 11.94% so far, significantly exceeding the 0.76% pullback of the Hang Seng Index during the same period.
Market analysts attribute the decline in Bubble Mart’s stock price to the performance of the Labubu series products in the secondary market. The secondary market prices of Labubu generations one to three have dropped by 3 to 11 yuan each, while the fourth generation mini Labubu’s average secondary market price has shrunk by over 50% since its initial release.
On August 28, Bubble Mart launched the fourth generation mini Labubu series online, with a single unit priced at 79 yuan and Group A/B at 1,106 yuan each. The launch day saw a rush to buy, with multiple platforms quickly selling out. The secondary market prices surged to 3,200 yuan for a full set, with hidden editions fetching nearly a thousand yuan. However, the hype quickly subsided. As of September 8, data from the “The RealReal” app showed that the mini Labubu’s average secondary market price had dropped to 107 yuan, and the full set price had fallen to 1,446 yuan. On the “Idle Fish” platform, the average transaction price in the past seven days was 105 yuan, down by 5 yuan compared to the previous week.
Renowned economist Pan Helin analyzed on 21Financial that the stock prices of trendy toy companies are closely linked to product demand. Labubu’s existence of an irrational bubble means its prices have self-reinforcing and weakening functions. Once it enters a downward trend, it could continue to plummet endlessly. While the inclusion of Bubble Mart in the Hang Seng Index brings additional allocations from index funds, the artificially boosted stock prices may not be sustainable.
Labubu made its debut in 2015 and gained broader attention after partnering with Bubble Mart in 2019. This collaboration enhanced Labubu’s popularity among collectors. In April 2024, Labubu gained widespread attention when BLACKPINK member Lisa was seen carrying it, including plush toys and keychains attached to bags.