Labubu craze 2025 : Australia’s top hedge fund, Arnott Capital, believes the viral Labubu craze is nearing its peak and could soon collapse — and it plans to profit from the downturn.
In a note to investors last week, the firm revealed its intention to short the stock of Pop Mart, the company behind the hugely popular dolls.
Pop Mart, based in China and listed in Hong Kong, has seen its market value soar from around $10 billion in 2020 to over $65 billion today, driven by surging demand for Labubu figures that far exceeds current supply.
Australia’s Arnott Capital Predicts Labubu Craze Crash, Plans to Profit from Pop Mart Downturn
The surge in popularity has been fuelled by massive social media buzz, with endorsements from stars like David Beckham, Kim Kardashian, and K-pop sensation Blackpink. Adding to the hype is Pop Mart’s “blind box” concept, where buyers have no idea which version they’ll get.
These collectibles, priced between $30 and $60 at retail, have been resold for staggering amounts in the secondary market — with one piece going for $US10,500 ($16,250) just last week.
But Arnott Capital believes the frenzy is starting to fade.
The challenge with shorting what we call ‘hype cycle’ or ‘fad’ stocks is that, without a clear trigger, it’s impossible to know how long their momentum will continue — it’s like trying to measure a piece of string with no end,” the firm told investors in its note.
Hedge Fund Warns Labubu Mania Is Peaking as Prices Drop, Drawing Comparisons to Hello Kitty Bubble
However, we believe the catalyst is already playing out online.
Labubu resale prices hit their peak in June and have been falling steadily since.
We expect this decline to threaten much of the demand that drove sales in the second half of 2024 and the first half of 2025, likely leading to loss-making inventory and an oversupply that could flood the market.
Arnott Capital compared the trend to the Hello Kitty boom of the early 2010s, when Sanrio’s share price soared nearly 700% before collapsing within just a couple of years.
We see the Labubu doll following a similar hype cycle, but at a faster pace — driven by the unique ‘blind box’ model, which in our view has turned it into a kind of pseudo lottery,” the firm noted.
Strong demand and limited supply have fueled scalpers to snap up the dolls and resell them at a profit, while dedicated websites even help collectors use bots to secure purchases.
Just last month, fans endured the chilly Victorian winter, camping overnight for the grand opening of a Pop Mart store in Melbourne — one of 11 locations in Australia, with another planned for Sydney’s CBD later this year.
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