Core Viewpoint - Pop Mart, once highly favored by the market, is currently facing a wave of short selling, with its stock price dropping significantly from its peak earlier this year [2][9]. Group 1: Stock Performance - As of today, Pop Mart's stock price is HKD 200.4, down 8.49% from the previous trading day, resulting in a market capitalization of HKD 269.1 billion [2][9]. - The stock reached a peak price of HKD 339.8 in August, indicating a decline of 41% from its highest point, with a market value loss of HKD 187 billion [2][9]. Group 2: Reasons for Decline - Morgan Stanley has revised its revenue growth forecast for Pop Mart for 2026 from 30% to 18%, citing a near 35% penetration rate in the Chinese blind box market, which, along with intensified competition, is expected to suppress growth [3][10]. - The core IP "Labubu" has lost its scarcity, as the company increased its monthly production from 10 million to 50 million units, leading to a rapid decline in secondary market premiums [3][10]. - Concerns about a slowdown in overseas sales growth are emerging, with a projected decline in U.S. sales growth from 1,200% to below 500% during the Black Friday period [10][11]. Group 3: Institutional Actions and Market Sentiment - Institutional investors have lowered their valuations, with Morgan Stanley reducing its target price from HKD 382 to HKD 325, and Deutsche Bank setting a "hold" target price of HKD 228 [4][13]. - Since December 2, short selling in Hong Kong stocks has surged by 158%, with the short selling volume reaching 6.3% of the float, the highest level since August 2023 [4][13]. - Market sentiment has been affected by profit-taking, as the stock has corrected approximately 40% since its peak in late August, leading to a sell-off as investors seek to realize gains amid uncertainties regarding the transition from a single IP to multiple IPs [5][13]. Group 4: Executive Selling - Despite the significant drop in stock price, Pop Mart's executives and early shareholders are entering a period of intensive selling, with total cashing out exceeding HKD 6 billion [6][14]. - The founder and chairman, Wang Ning, plans to sell 21.7 million shares at HKD 71.98 each, cashing out approximately HKD 1.56 billion, reducing his stake from 50.34% to 48.73% [6][14]. - Other executives have also sold shares, with the COO cashing out HKD 151 million and the overseas business head cashing out HKD 89.97 million [6][14].

Core Viewpoint - Deutsche Bank warns that Pop Mart is facing an "Availability Paradox," where the rapid expansion of production capacity is leading to Labubu transitioning from a scarce trendy IP to a mass consumer product, which will diminish its fashion appeal and secondary market prices [1][2]. Group 1: Production Capacity and Market Dynamics - Pop Mart's production capacity has surged from an average of 10 million units per month in the first half of the year to 50 million units per month by the end of the year, trading scarcity for short-term revenue growth [1][2]. - The strong growth driven by Labubu is masking significant risks of supply-demand reversal, with potential valuation pressures if Labubu's popularity peaks in 2026 without new hits [1][3]. Group 2: Market Performance and Pricing Trends - Since August 2025, the premium for Labubu and other popular IPs has halved, with the price of Labubu's "hidden" variants dropping over 50% [6]. - Specific examples show that Labubu 1.0 "Exciting Macaron" hidden variant prices have fallen by 50%, while Labubu 3.0 "Love" variant prices have dropped by 81% [7]. Group 3: Consumer Sentiment and Product Reception - The secondary market has seen immediate discounts on newly released products, indicating a slowdown in sales and a potential "fashion fatigue" among consumers [11][12][14]. - Negative feedback regarding design and quality has increased on social media, suggesting a decline in consumer interest in the Labubu IP [13][14]. Group 4: Valuation Scenarios - Deutsche Bank maintains a "Hold" rating for Pop Mart with a target price of 228 HKD, presenting two contrasting valuation scenarios based on Labubu's popularity trajectory [15]. - In a bearish scenario, if Labubu's popularity peaks in 2026, net profit could drop to 10.6 billion RMB, leading to a significant increase in implied P/E ratio to 23x [15]. - Conversely, in a bullish scenario with sustained growth and new IP launches, net profit could exceed 23.1 billion RMB, reducing the implied P/E ratio to 13x [16].