The Labubu phenomenon has propelled Pop Mart to unprecedented heights in 2025, with revenue surging 204% year-on-year to 13.88 billion yuan in the first half of the year, driven by $418 million in global sales from the mischievous monster character [1]. Yet, this meteoric rise has been shadowed by a crisis of counterfeiting and legal battles that threaten to erode the brand’s premium positioning. As counterfeit “Lafufus” flood markets—from 7-Eleven shelves in California to Southeast Asian e-commerce platforms—the company faces a dual challenge: protecting its intellectual property (IP) while maintaining investor confidence in a volatile market.
The Double-Edged Sword of Viral Success
Pop Mart’s blind-box model, which leverages scarcity and surprise to drive demand, has proven a masterstroke. Labubu’s global appeal has enabled the company to open 50 new stores in 2025 and project 30 billion yuan in annual revenue [1]. However, the same model that fuels demand also incentivizes counterfeiting. According to a report by AINvest, 1.8 million fake Labubus were seized by Chinese customs in 2025 alone, with counterfeiters using 3D printing and digital platforms to replicate designs [2]. These knockoffs, often sold at a fraction of the price, have slashed resale values by over 50% in some regions and introduced safety risks, including choking hazards and toxic materials [1].
The U.S. Consumer Product Safety Commission (CPSC) has already issued warnings about fake Labubus, while Pop Mart’s 144-page lawsuit against 7-Eleven underscores the legal complexities of enforcing IP in a globalized market [2]. For investors, the question looms: Can Pop Mart’s aggressive anti-counterfeit measures—70+ IP protections, holographic stickers, and blockchain-based authentication—offset the reputational and financial damage caused by counterfeits?
Brand Resilience: Innovation vs. Saturation
Pop Mart’s response to the crisis has been multifaceted. The company has trademarked the term “Lafufu” to control the narrative around counterfeits and introduced serialized identifiers and UV-reactive details to authenticate products [1]. CEO Wang Ning’s recent launch of a mini Labubu version, inspired by the Sonny Angel model, has already driven a 14% stock surge [1]. Yet, these efforts face an uphill battle against a counterfeit ecosystem that thrives on digital anonymity.
Analysts at Meyka note that Pop Mart’s diversification into jewelry, home goods, and theme parks—while promising—remains in early stages and may not fully offset the risks of overreliance on a single IP [5]. The company’s 64.05% gross margin in 2024, significantly higher than traditional toy rivals like Mattel and Hasbro, highlights its pricing power [2]. However, Morningstar’s Jeff Zhang warns that valuations may not account for long-term risks, including regulatory scrutiny of the blind-box model and consumer fatigue [5].
Investor Sentiment: Volatility and Strategic Hurdles
Pop Mart’s stock has mirrored the turbulence of its ecosystem. A 6.6% drop in June 2025 followed critical media coverage questioning the ethical implications of the blind-box model [2]. While the company’s $40 billion market cap reflects optimism about its global expansion—projected to generate 52% of 2025 revenue from international markets—investors remain wary of counterfeit-driven brand erosion [3].
The company’s focus on Gen Z through AR games, mobile apps, and social media has been a key growth driver, with digital revenue surging 726.6% in 2025 [3]. Yet, as Futunn reports, the secondary market for Labubus now includes both authentic and counterfeit products, complicating consumer trust [2]. Strategic recommendations from analysts include AI-driven counterfeit detection and blockchain-based authentication to reinforce brand integrity [4].
Long-Term Outlook: A Test of Adaptability
Pop Mart’s ability to sustain its dominance will hinge on its capacity to innovate beyond Labubu. The company’s foray into animated films and theme parks, coupled with sustainability goals (75% recyclable packaging by 2024), aligns with Gen Z’s values [2]. However, regulatory risks—particularly in markets like the U.S. and EU—remain a wildcard. The 7-Eleven lawsuit, for instance, sets a precedent for holding retailers accountable for counterfeit sales, but enforcement varies globally [3].
For investors, the Labubu-driven ecosystem presents a paradox: a high-growth, high-margin business model undermined by vulnerabilities in IP enforcement and consumer trust. While Pop Mart’s financials remain robust—$840 million in cash and no long-term debt [2]—the path to long-term sustainability requires balancing innovation with vigilance.
Conclusion
The Labubu phenomenon has redefined the collectible toy market, but its success is a double-edged sword. Counterfeiting and legal challenges threaten to dilute the brand’s premium image, while regulatory scrutiny and market saturation pose risks to investor returns. Pop Mart’s resilience will depend on its ability to adapt its IP strategy, embrace digital tools like blockchain, and diversify its product portfolio. For now, the company’s stock remains a high-risk, high-reward proposition—a testament to the volatile nature of viral consumer trends in the post-pandemic era.
**Source:[1] The Labubu Dolls Seizure and Its Implications for Toy Intellectual Property Markets [https://www.ainvest.com/news/labubu-dolls-seizure-implications-toy-intellectual-property-markets-2509/][2] Pop Mart’s Labubu Quality Crisis: A Warning Sign for the Blind Box Toy Market Profitability [https://www.ainvest.com/news/pop-mart-labubu-quality-crisis-warning-sign-blind-box-toy-market-profitability-2508/][3] The New Gold Rush in Designer Toys: Pop Mart’s Legal Battle and the Future of IP-Driven Premiumization [https://www.ainvest.com/news/gold-rush-designer-toys-pop-mart-legal-battle-future-ip-driven-premiumization-2507/][4] 2025 Labubu New Design Trend: Market Drivers & Growth [https://www.accio.com/business/trend-of-labubu-new-design][5] Labubu-maker Pop Mart’s shares rise after it posts 400% profit surge [https://www.cnbc.com/2025/08/20/labubu-pop-mart-shares-after-profit-surge.html]