With quarterly results imminent, why has POP MART (09992) fallen for four consecutive days?

POP MART (09992) shares are trading on a third-quarter report card that has not yet been officially released. On October 20, POP MART's stock fell as much as 5.8% intraday, hitting its lowest level since April 2025, before closing at HK$135.60, down 4.6%. Including declines on the previous three trading days, the stock has fallen for four consecutive sessions, losing about 9.7% over the four trading days. With the company yet to clarify its third-quarter business update schedule, institutional channel tracking data has become an important basis for investors to judge performance, and expectations of sales declines have further weighed on market sentiment. A Goldman Sachs channel tracking report released on October 13 showed that POP MART's combined sales on Tmall and Douyin fell 30% year on year in the third quarter, including a 44% drop in September alone. The U.S. market was also under pressure, with Goldman Sachs-tracked credit card sales data showing a 58% year-on-year decline in the third quarter and a 50% drop in September. On October 20, Morningstar Asia equity analyst Jeff Zhang cited third-party monitoring data saying POP MART's third-quarter sales fell more than 50% year on year. Citi expects the company's third-quarter group revenue to fall about 35% year on year, with the decline narrowing to 17% in the fourth quarter. These figures are not fully comparable, but they point to the same fact: the market is preparing for a significant sales decline at POP MART in the third quarter. Goldman Sachs noted that in the same period of 2025, LABUBU's "Heartfelt Code" and "Forward High Energy" series were at peak supply, raising the year-on-year comparison base for this year. As the high growth brought by last year's hit products gradually exits the comparison window, POP MART's sales growth naturally faces pressure. But a high base does not explain all the changes. U.S. credit card sales tracking fell 58% year on year in the third quarter, further widening from 53% in the second quarter; domestic Tmall and Douyin sales fell 44% year on year in September, also significantly weaker than the overall third-quarter decline of 30%. Therefore, market concerns are no longer limited to last year's excessively high base. Whether the growth previously brought by LABUBU can continue and whether new IPs can contribute a sufficiently large sales scale are becoming key to POP MART's growth expectations. If new products are temporarily unable to fill the gap left by cooling core IP popularity, even as the high base gradually fades, a sales recovery may take longer. Wang Ning had already warned of slowing growth at the interim results meeting on August 20. He described pressure in the second half of 2026 as greater than in the first half and said the company "is very likely unable to meet the 20% growth target set at the beginning of the year." But he also stressed that although short-term development faces difficulties, the company remains confident over the long term and will not make decisions harmful to long-term development just to cater to market expectations. Overseas expansion has also entered a stage of shifting from pursuing expansion to consolidating operating capabilities. In the first half of 2026, POP MART's overseas revenue fell 11.1% year on year, with Asia-Pacific and the Americas down 9.7% and 16.5%, respectively, while Europe and other regions grew 5.9%. During the same period, the company added a net 22 stores in the Americas, 5 in Asia-Pacific and 9 in Europe and other regions. Management said overseas online channels were affected by traffic returning to normal levels and that the company will place more emphasis on team building, logistics systems, cross-regional collaboration and store operating quality in the future. Institutions remain clearly divided on how long this round of adjustment will last. Deutsche Bank maintained a sell rating on October 14 with a target price of HK$115; Goldman Sachs gave a target price of HK$139.5 with a neutral rating. Citi maintained a buy rating with a target price of HK$198 and believes a sales recovery may not become more evident until 2027. The core of the disagreement is whether POP MART's sales decline is a phased adjustment under a high base or whether its growth model needs to be revalidated. In the short term, this question is likely to remain unresolved. This article is reprinted from "Wallstreetcn"; GMTEight editor: Feng Qiuyi.