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Over the last 5 trading sessions, the company’s securities have fallen by more than 30%, and from the historical maximum in August – by almost 60%, Bloomberg writes. The pressure on quotations intensified after the publication of financial statements, which showed a high dependence of the business on a single product line.
By the end of 2025, the Monsters series, associated with Labubu, accounted for about 40% of total revenue, while a year earlier this figure was 23%. Meanwhile, other popular characters such as Molly and Crybaby showed sales below expectations.
An additional negative factor was the increase in inventory. The turnover rate increased 21% year-over-year to 123 days by the end of 2025. This may indicate a slowdown in demand, despite the company’s explanations about expanding international markets and logistical delays.
Investors are also wary of capital market action. After its biggest one-day drop of 23% (March 25), the company conducted a share buyback of about HK$1.3 billion (about US$166 million), but that did not halt the decline.
The stock is currently trading at a multiple of about 10.3x to projected earnings, well below its three-year average of about 24x. Despite this, investor interest remains weak.
Pressure is also building from the derivatives market, with the volume of short positions reaching 123 million shares, up 16% since the reporting. There was also a record demand for bearish options (put contracts).
Earlier, on the back of Labubu’s global popularity, the stock has surged nearly 300% since the start of 2025, making the case a rare example of a Chinese brand successfully entering the international market. Now, however, analysts are warning: without a new hit and a diversified product lineup, the company could face further valuation cuts and downward revisions to forecasts.
