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Shares of the Chinese toy company took a nosedive after the annual earnings report highlighted its growing dependence on the popular Labubu monster dolls, which were instrumental in nearly tripling the company’s revenue last year.
The stock closed 22.5% lower at HKD168.30 (roughly USD21.53) in Hong Kong, marking a significant decline from its peak of HKD335.40 on August 26 of the previous year. Since then, the shares have essentially halved in value.
Revenue skyrocketed by 185% to 37.1 billion yuan (about USD4.75 billion) over the past year, surpassing 30 billion yuan for the first time, according to the company’s financial statements. Adjusted net profit also jumped 285%, reaching 13.1 billion yuan.
For the first time, income from the “Monsters” series, including the elf-like Labubu dolls, exceeded 10 billion yuan. The company did not offer any guidance on future earnings.
These results have raised concerns among investors about the heavy reliance on Labubu, as a single intellectual property dominating such a large portion of revenue can hinder the development of other franchises, analysts stated.
Other product lines, like the Twinkle Twinkle series—small star collectibles—are gaining traction but haven’t achieved the same global recognition as Labubu.
Last year, the Monsters series became an international phenomenon, generating 14.16 billion yuan in revenue—a 366% increase. Six other product lines, such as Molly, Dimoo, and Twinkle Twinkle, each earned over 2 billion yuan (approximately USD290 million), while 17 additional franchises brought in over 100 million yuan (around USD14.5 million).
Recently, the company announced a collaboration with Sony Pictures Entertainment to develop a Labubu film, part of a broader effort to establish Labubu as a lasting franchise.
In terms of regional performance, the Chinese market saw revenue increase by 135% to 20.9 billion yuan, representing 56% of total revenue. The Asia-Pacific region contributed 8 billion yuan, a 157% rise, making up 22% of total sales.
In North America, where Labubu experienced a major craze, revenue surged an impressive 748% to 6.8 billion yuan, accounting for over 18% of the total. Meanwhile, Europe and other regions generated 1.45 billion yuan, up 506%, comprising nearly 4% of overall revenue.
The company reported having 630 brick-and-mortar stores across 20 countries last year, adding 109 new locations, including 14 in China. New stores were also launched in Germany, Denmark, Canada, and the Philippines. Additionally, the company operated 2,637 robot stores, increasing their number by 165 during the same period.
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