Bernstein Analyst Warns of Impending Decline in Labubu Popularity

Comparison to Beanie Babies Raises Concerns

Melinda Hu, a senior consumer stock research analyst at Bernstein Hong Kong, has raised concerns that the hype surrounding Labubu, a popular toy produced by Pop Mart International Group Ltd, may be reaching its peak. Hu draws parallels between Labubu's current sales trend and the speculative bubble of Beanie Babies in the late 1990s. The Beanie Babies phenomenon, which was characterized by a surge in value due to perceived scarcity and speculative buying, ultimately burst in 1999, leaving most of the toys virtually worthless.

Factors Driving the Speculative Cycle

Hu points out that the factors driving Labubu's popularity - scarcity, hunting for rare items, dopamine rush from collecting, and a thriving secondary market - are similar to those that fueled the Beanie Babies bubble. This speculative cycle, she warns, could soon reach its limit. As the market becomes saturated and the novelty wears off, demand may plummet, potentially leaving collectors with overvalued inventory.

Market Implications

As the only analyst currently recommending a sell for Pop Mart International, Hu's warning carries significant weight. The company's stock performance has been closely tied to the continued popularity of Labubu and other similar products. If the speculative bubble surrounding these products bursts, it could have a substantial impact on Pop Mart's financial performance and stock valuation.

Conclusion

While it remains to be seen whether Labubu's popularity will follow the same trajectory as Beanie Babies, Hu's analysis serves as a cautionary tale for investors and collectors alike. The similarity between the two phenomena suggests that the current hype may not be sustainable in the long term.