Key Takeaways:
- Deutsche Bank downgraded POP MART to Sell with a HKD140 target price
- May China online sales fell 5% year-over-year, the first decline since 2024
- Short-selling ratio hit 16.6% on June 16 as bearish sentiment builds
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POP MART downgraded to Sell at Deutsche Bank as China sales fall 5%
Deutsche Bank downgraded POP MART to Sell with a HKD140 target, citing a 5% drop in May China online sales — the first decline since 2024.
"The latest data confirms our earlier forecast that POP MART's domestic market would face increasing sales pressure starting from the second quarter," Deutsche Bank analysts said in a note dated June 16.
May online sales fell 5% year-over-year and 14% month-over-month, coming in 25% below the average monthly sales in the second half of 2025. The bank attributed the weakness to a higher base effect and waning IP popularity in the China market. The May performance marks a sharp reversal from the solid growth trend POP MART had sustained throughout 2024 and 2025.
The downgrade puts POP MART among the most shorted Hong Kong-listed consumer stocks, with a short-selling ratio of 16.6% on June 16. The stock fell 1.5% on the day of the report, and the HKD140 target implies further downside from current levels. The Hang Seng Index has declined 3.2% year-to-date, adding to headwinds for consumer discretionary names.
Since early 2026, POP MART has accelerated new product launches, which initially drove sales. But the bank expects "trend fatigue" to set in as product supply increases and the base effect strengthens in the second quarter. Deutsche Bank sees a more pronounced downcycle in both China and overseas markets in the second half of 2026, as international expansion faces similar saturation risks.
CICC, in a separate note, highlighted POP MART's LABUBU character debut at the World Cup as a brand-awareness driver and reiterated the stock as a top sector pick, offering a contrasting view to Deutsche Bank's bearish stance. The divergence between the two banks reflects uncertainty over whether POP MART's IP-driven model can sustain its growth trajectory as competition from other toy and collectible brands intensifies in China.
The Sell rating signals that POP MART's domestic growth engine may be stalling after years of expansion. Investors will watch June and July online sales data for confirmation of whether the May decline marks the start of a sustained downcycle or a one-month anomaly.
This article is for informational purposes only and does not constitute investment advice.
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