POP MART's stock price is under pressure and has fallen, with Bernstein warning that Q4 performance may be below expectations
Bernstein pointed out that data from trading, social media popularity, and search interest indicate that the demand for POP MART has generally slowed down in both the Chinese and overseas markets in October. However, POP MART's increase this year still reached about 140%. Bernstein is the only institution among more than 40 brokerages covering the company that has given a "underperform" rating
POP MART's stock price is under pressure after investment bank Bernstein released a report warning that its fourth-quarter performance may be below expectations.
On November 11, Bernstein published a research report citing multiple data sources indicating that demand for POP MART in both China and overseas markets generally slowed in October. The report stated that the observed demand weakness has intensified since the peak levels in June. Analysts wrote in the report:
Independent data sources such as transaction data, social media popularity, and search interest are weakening, collectively painting a picture of a fundamental demand slowdown that is difficult to attribute to noise or (consumer) channel shifts.
The report believes that the "magnitude and consistency of the decline in various indicators in October suggest that fourth-quarter performance may disappoint market expectations." Based on this, Bernstein maintained a target price of HKD 225 for POP MART.
On Wednesday, November 12, POP MART's Hong Kong stock fell by as much as 3.7% during trading, becoming one of the stocks leading the market decline. Although the company's third-quarter sales increased by as much as 250% year-on-year, the market is skeptical about the sustainability of the fervent demand for its popular products, especially the Labubu dolls.
Before Bernstein issued its warning, POP MART had already experienced a round of correction due to investor concerns about its prospects and profit-taking. The stock was once one of the hottest trades in China's consumer sector, but its price has now fallen nearly 40% from the record high in late August, with a market value evaporating by USD 20 billion.
Despite the recent significant price correction, the stock has still accumulated a rise of about 140% this year. Notably, among the more than 40 brokerages covering POP MART, Bernstein is the only one to give an "underperform" rating, indicating a significant divergence in market views on its future performance.
