This ‘blind box’ held a pleasant surprise for investors

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Subscribe to enjoy similar stories. Forget semiconductors or artificial intelligence—one of the year’s hottest stocks has fur and plastic eyes and comes from China. Pop Mart has turned cute collectible toys into treasure, and you might see more of its shops around if its overseas expansion goes according to plan.

Shares of the Hong Kong-listed company have more than quadrupled this year, handily beating better-known Chinese technology stocks including Alibaba and Tencent. It is a rare bit of good news for Chinese stocks. While the benchmark Hang Seng Index is up around 15% this year, on track to snap a four-year losing streak, it has lagged behind the S&P 500 by about 50 percentage points over the past three years.

Pop Mart’s business is indeed booming. Its revenue last quarter more than doubled from a year earlier. The company sells collectible toys through so-called blind boxes, the contents of which buyers don’t know until they are opened.

While it has collaborated with popular brands including Marvel and Harry Potter, more than 80% of its revenue comes from its own designs. Some limited-edition toys fetch thousands of dollars on the secondhand market. One particular character that stood out this year is a furry monster with pointy ears and sharp teeth, called Labubu.

It got a boost in Southeast Asia as the Thai singer Lisa from the K-pop girl band Blackpink posted frequently about the character on social media. Revenue from products in the monsters series, which includes Labubu, nearly quadrupled in the first half of 2024 compared with a year earlier, and sales in Southeast Asia grew by close to 500%. Around 30% of Pop Mart’s revenue in the first half of 2024 came from outside mainland China.