NextFin News - Short sellers are still leaning against Pop Mart even after the trade has become expensive, a setup that says as much about market positioning as it does about the Chinese toymaker’s fundamentals. As of Tuesday, short interest in Pop Mart had climbed to 12.67% of shares outstanding from 11.3% in April, while the stock had rebounded 8% from its year-to-date low in April and was trading at HK$153, more than half below its peak in August last year.
That is a punishing backdrop for anyone betting against the stock. Pop Mart was the only one of Hong Kong’s 10 most-shorted stocks where shorts were losing money, according to S&P Global Market Intelligence. Matt Chessum, executive director of equity and analytical products at the firm, said the name stands out because short sellers are losing money even as the stock remains heavily shorted. He also pointed to resilient consumer demand and the risk of a technical short squeeze as the shares recover from their April lows.
The company’s latest results gave both sides of the trade enough evidence to keep arguing. Pop Mart said its 2025 revenue rose to 37.12 billion yuan, while profit attributable to owners increased to 12.78 billion yuan. In March, the company said it expected revenue growth of no less than 20% in 2026. Those numbers are still strong enough to support the bull case that Pop Mart has room to keep growing, but they also raise the bar for bears who need to show that growth is fading faster than the market already assumes.
The bearish argument is simple: the stock has already had a huge run, the valuation still leaves little room for disappointment, and the company’s popularity could be vulnerable if demand cools outside China. The problem is that short sellers do not get paid for being vaguely right about a stock’s long-term risk. They get paid when the shares fall. On that score, Pop Mart has not cooperated. A stock can be far below its peak and still be painful to short if the rebound is fast enough and borrow costs stay elevated.
That is why this trade is now so unusual. Pop Mart’s shares have more than halved from their August peak, but they have also recovered enough from April to force the market to reprice the short thesis. When a name is this heavily shorted, even a modest recovery can turn into a problem for traders who are already paying to maintain their positions.
Pop Mart has built its brand around collectible figures, blind-box mechanics, and a character-driven franchise model that rewards repeat buying. The Labubu character has become the clearest symbol of that formula. But the more important point for the stock is that the business model has created an unusually sticky consumer story, one that keeps attracting both believers and skeptics. Bulls see room for more launches, wider distribution, and continued overseas momentum. Bears see a fad risk and worry that growth rates will not stay high once comparisons get harder.
That tension explains why the stock keeps inviting short sellers even after the losses start to mount. Traders often short the names that have already become crowded on the long side, especially when they think sentiment has outrun fundamentals. Pop Mart fits that profile. It is a consumer stock with an aggressively watched brand, a powerful narrative, and a share price that has moved enough to make both momentum and valuation part of the debate.
What The Market Is Pricing In
The current setup suggests the market is no longer pricing Pop Mart as a simple growth story. It is pricing in a fight between slowing-momentum fears and the possibility that the company’s ecosystem still has more room to run. That is why the short base has not disappeared. If the company merely continues to grow at a healthy rate, the bears will have to keep absorbing mark-to-market losses. If growth reaccelerates, the squeeze risk gets worse.
Chessum said the company stands out because it is the only stock on the Hong Kong short list where bears are losing money. That matters because short interest is not static. It reflects a mix of conviction, hedging, and the cost of carrying the trade. The more expensive the borrow, the less attractive the position becomes if the stock refuses to break lower. The CNBC report cited high fees as another constraint on short sellers, which means time itself is working against them.
“Pop Mart stands out as the only stock on the list where shorts are losing money,” said Matt Chessum, executive director of equity and analytical products at S&P Global Market Intelligence.
The hard part for bears is that they do not need a blowout quarter to be wrong. They only need Pop Mart to be good enough. In a highly shorted name, “good enough” can be a dangerous outcome for the short side because it deprives the trade of urgency. The stock does not have to rip higher every day; it only has to stop disappointing. Once that happens, the relationship between position size, borrow cost, and price momentum can turn into a slow squeeze.
Pop Mart’s recent price action shows that dynamic in real time. The shares are still far below their peak, which gives skeptics room to argue that the long-term story has not been fully validated. But the stock’s rebound from the April low suggests that the market is still willing to pay for the possibility that the company remains a consumer phenomenon rather than a fading fad. That is enough to keep short sellers uncomfortable.
It also means that the short thesis has to fight two battles at once. It has to argue that growth is slowing and that the stock is still too expensive. Those are related but not identical claims. If the first one is not immediately visible in the numbers, the second one can be enough to keep shorts early and stuck. Pop Mart’s positioning shows how difficult that can be in a market that has already seen the stock fall sharply once.
The Fundamentals Still Give The Bulls Room To Push Back
Pop Mart’s 2025 results remain the strongest reason the stock has not broken down more cleanly. Revenue reached 37.12 billion yuan, up sharply from the prior year, and profit attributable to owners rose to 12.78 billion yuan. The company also said it expects revenue growth of no less than 20% in 2026. That is not the language of a business in immediate distress.
Instead, the numbers support a more nuanced read. Pop Mart is no longer just a momentum trade; it is also a company that has to prove that its growth can stay high enough to justify investor enthusiasm after a massive run. That is a more difficult job, but not an impossible one. For now, the bulls still have the cleanest rebuttal: the company is still growing quickly, still generating strong profits, and still talking about a year of double-digit expansion.
The bears’ counterpoint is that growth rates can decelerate quickly from a high base. That is true. But it is also why the short thesis needs more than skepticism. If the market already knows the company is not immune to slowdown, then the bearish edge must come from a sharper disappointment than consensus expects. Until that appears, the short position can remain economically correct and financially painful.
The company’s business model also makes it easier for bulls to argue that demand can persist longer than skeptics think. Collectibles are not priced only on current demand; they are also priced on cultural relevance, product cadence, and the ability to keep a fan base engaged. Those are not simple metrics to model, which helps explain why the stock can stay volatile even when the financial results are still strong.
The result is a market that is not waiting for a full thesis break. It is waiting for proof. That is a much higher bar for the bears than it was when the stock was first run up by the Labubu phenomenon. Every quarter that avoids a clear slowdown makes the short thesis harder to carry.
Why The Trade Can Stay Painful Even Below The Peak
One of the most misleading things about a stock like Pop Mart is that a long decline does not automatically make shorting easy. The shares can be more than half below a prior peak and still be difficult to press if the downtrend is interrupted by sharp rallies. For the short seller, path matters as much as destination. A falling stock that bounces often can still rack up losses faster than a smoother, slower drift lower.
That is especially true when borrow costs are high. The carry expense turns the position into a race against time. Even if a trader is ultimately right about the business, the stock has to cooperate quickly enough to make the trade worthwhile. Pop Mart’s current setup suggests the opposite: the longer the stock stabilizes, the more expensive the bearish bet becomes to maintain.
This is also why the stock has become such a useful case study in sentiment and positioning. The name is not short because the business is collapsing. It is short because investors can see enough uncertainty to justify the bet, and because the stock’s rise made the bearish case feel attractive at the wrong moment. When those two things happen together, a stock can become a crowded battleground.
Pop Mart’s situation is therefore bigger than a single toy brand or a single character line. It is a reminder that in markets, a popular narrative can support both the bull case and the bear case at the same time. The bulls can point to growth, profit, and product momentum. The bears can point to valuation, slowing comparisons, and the risk of a fade. What decides the trade is often not the argument itself but whether the stock is already positioned for it.
At the moment, Pop Mart’s stock is positioned to punish early bears more than late bulls. That does not make the short thesis wrong. It just makes it costly.
What happens next will depend on the company’s ability to keep the growth story credible. Investors will watch whether the 2026 revenue outlook holds, whether new product cycles broaden the base beyond the Labubu-driven surge, and whether the shares can keep recovering without forcing another round of short-covering. If the company keeps delivering strong numbers, the current short base will stay under pressure. If growth cools faster than expected, the bears may finally get the payoff they have been waiting for.
For now, Pop Mart is sending a simple message to the market: being right on the narrative is not the same as being right on the timing. In this stock, that difference has already cost the shorts money.
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