Why are the three once highly sought-after consumer darlings no longer favored by the market?

A plush toy, a piece of gold jewelry, and a cup of milk tea once supported a market value of over HK$730 billion on the Hong Kong stock market.

In June 2025, the share prices of Pop Mart, Laopu Gold, and Mixue Group hit new highs one after another. The combined market capitalization of the three companies once exceeded HK$730 billion, making them the highly sought-after "Three Consumer Sisters" in the capital market. More than a year later, the share prices of all three companies have fallen by more than half from their respective highs, with Laopu Gold's decline approaching three-quarters.

The latest bad news came from Pop Mart. On October 27, the company disclosed its third-quarter operating data, showing that the overall revenue decreased by 45% to 50% year-on-year, and the decline in the Americas market was as high as 70% to 75%. A year ago, LABUBU was sweeping across the world, and its revenue in the same period was still growing at a rate of 245% to 250%. With the growth plummeting, Pop Mart's share price once fell by more than 6% at the opening of the next trading day.

The other two companies, even with their profits still growing significantly, failed to stop the decline in their share prices.

Laopu Gold saw its revenue rise by 60.3% in the first half of this year, and its adjusted net profit increase by 83.6%, but its share price has retreated the most among the three companies. Mixue Group's revenue increased by 2.3% in the same period, while its net profit dropped by 14.7%, and it also failed to get rid of the downward trend of its share price.

The growth curves of the three businesses - trendy toys, gold jewelry, and affordable tea drinks - are different, but they have encountered similar situations. Last year, the capital market was willing to pay a high premium for the growth imagination brought by hit IPs, high-end brands and chain expansion; now, even if there is still growth, investors are no longer willing to give the same high valuation.

At the same time, technology sectors such as AI computing power and semiconductors have become new investment hotspots in the market. Compared with consumer companies whose growth has gradually returned to normal, the demand expansion and technological breakthroughs in the AI industrial chain provide investors with another imagination of future growth.

The collective fall out of favor of the "Three Consumer Sisters" - is it because their own performance can no longer support the past high valuations, or because the market has found more attractive investment directions?

01. From consumption to AI, the capital market has a new favorite

In 2025, the popularity of the three consumer sisters was backed by real demand and performance. Shen Meng, Director of Charisma Capital, believes that this round of rise was driven by structural changes in domestic consumer demand. Consumer preferences such as pursuing self-pleasure, value preservation and low prices have formed new trends, driving the rapid growth of related enterprises. The rise of the three companies just reflects these different consumer demands.

In the first half of 2025, the international gold price repeatedly hit new highs, and there was a queue boom in Laopu Gold's stores. The store in Yuyuan Garden, Shanghai once had a queue of up to 10 hours. Consumers are willing to pay a premium for ancient craft, design and brand, and also value the value support of solid gold materials. In the same year, LABUBU changed from a collection in the cabinet to a fashion accessory hung on young people's bags, and the boom spread all the way overseas. One sells gold and the other sells plush toys. Seemingly unrelated, they both make consumers willing to pay for values beyond the products themselves.

Image source / Unsplash

On the other side, Mixue Bingcheng has built a big business with products priced at a few yuan. The 2-yuan ice cream and 4-yuan lemonade are backed by the cost advantages formed by large-scale procurement, self-built production and logistics distribution. By the end of June 2025, Mixue Group had 53,014 stores worldwide, of which more than half of the stores in Chinese mainland were located in tier-3 and lower-tier cities.

These three seemingly different consumer choices have all brought considerable performance growth. In 2025, Pop Mart's plush product revenue increased by 560.6% year-on-year to 18.708 billion yuan, and its overseas revenue increased by 291.9%; Laopu Gold's revenue in the first half of the year increased by 251%, and its net profit increased by 285.8%; Mixue Group's revenue in the same period increased by 39.3%.

The three companies have respectively found consumers who are willing to pay for emotional value, brand and gold materials, and low-cost products. The scarcity of this growth is exactly the important reason why the capital market was willing to pay high valuations at that time.

In August 2025, Pop Mart's share price once approached HK$340, with a market value of over HK$450 billion and a price-earnings ratio of more than 105 times. Laopu Gold's price-earnings ratio once reached about 140 times. Even Mixue Group, which had a relatively low price-earnings ratio among the three, had a ratio of more than 45 times. A 100x price-earnings ratio means that every 1 yuan of annual net profit corresponds to 100 yuan of market value. Investors are willing to pay such a price, obviously not just for the immediate profits, but also for the expectation of sustained growth for many years in the future.

In Shen Meng's view, the capital market often looks for reasonable explanations for short-term share price rises, and packages the phased advantages of enterprises into investment stories with long-term growth potential. But being endowed with a certain concept does not mean that the enterprise really has the ability to continuously fulfill this expectation.

Risks emerged very early. On June 5, 2025, the leading new consumer stocks on the Hong Kong stock market collectively pulled back, with Laopu Gold falling by 9.05% in a single day and Mixue Group falling by 7.72%. Just the day before, the three companies had hit new share price highs together. At that time, Zhou Wenbo, fund manager of Fullgoal Fund, reminded that new consumer companies had attracted a lot of capital attention, but some companies were no longer cheap, and there was a risk of short-term share price adjustment.

After that, the share price trends of the three companies diverged, and Pop Mart even hit a higher record in August. However, the market's concerns about the sustainability of high valuations have continued to emerge. Since the second half of 2025, AI has become a more concerned growth direction in the capital market. As capital concentrates in technology sectors such as computing power and semiconductors, the popularity of previously popular consumer stocks in the heavy positions of public funds has gradually cooled down.

According to Choice statistics, the number of public funds holding heavy positions in Pop Mart has shrunk all the way from 311 at the end of the second quarter of 2025 to 136 at the end of the fourth quarter of 2025, 110 at the end of the first quarter of 2026, and only 86 at the end of the second quarter of 2026, with a cumulative reduction of more than 70%; the number of shares held dropped from 33.2482 million shares at the end of the first quarter of 2026 to 21.1468 million shares at the end of the second quarter, a reduction of about 36% in one quarter.

At the same time, the AI industrial chain has gradually become the key allocation focus of public funds. According to the statistics of Guosen Securities, among the heavily held stocks of funds in the second quarter of 2026, the proportion of the total market value of the technology sector rose by 23.6 percentage points to 60.8%; as the largest industry within the technology sector, the proportion of the market value of the electronic industry rose by 21.2 percentage points to 42.9%. The proportion of the consumer sector dropped by 7.6 percentage points to 9.5%.

This change is more intuitive in the position adjustment of the same fund. In the second quarter of 2025, the top ten heavy positions of the Zhongjia Emerging Consumer Fund included consumer companies such as Pop Mart, Jiangxin Home, and Guming. By the first quarter of 2026, technology companies such as Cambricon and GigaDevice had entered its top ten heavy positions. The fund manager explained in the quarterly report that technology changing life is still the main line of the industrial trend throughout the year.

Shenwan Hongyuan pointed out in the research report for the second quarter of 2026 that the technology track has a capital siphon effect on other industries. On the one hand, technology hardware has attracted allocation funds from other industries; on the other hand, technology-themed funds have attracted more investors to subscribe with their performance.

Shen Meng believes that this is related to market liquidity and capital rotation. "The scale of market liquidity is limited, and capital rotates between different hot sectors. Capital is chasing returns that are as safe and high as possible, and the most critical weather vane is policy orientation."

But the flow of capital to AI does not mean that AI caused the decline of consumer stocks.

Investor Chen Momo believes that from the timeline, the high valuations of the three consumer sisters already had adjustment pressure before the siphon effect of AI capital became prominent. The AI market has intensified capital diversion, which may make consumer stocks fall deeper and faster, but it is not the fundamental reason for the decline.

"The transfer of capital magnified the decline, but did not cause it." Chen Momo said that even without AI, the capital market would look for other assets with higher growth expectations, and consumer stocks would still face adjustments, but the magnitude might be smaller and the speed slower.

By the third quarter of 2026, public funds' allocation to the electronics and communication industries has also declined, and the pharmaceutical and some consumer industries have been re-increased in allocation. Capital preferences are still changing, but for the three consumer sisters, to regain market favor, they need to answer how far their growth can go.

02. Three types of businesses can no longer support the original valuations?

Facing the same problem, the three companies are encountering three different tests.

The problem for Pop Mart is how long a super IP can remain popular.

In 2025, the revenue of THE MONSTERS series reached 14.16 billion yuan, a year-on-year increase of 365.7%, accounting for nearly 40% of Pop Mart's total revenue. The globally popular LABUBU comes from this series.

Now, this popularity is fading. In June 2025, with the official centralized replenishment, the second-hand price of some LABUBU styles quickly fell back. In June 2026, the LABUBU 4.0 "Vintage Barbershop" series was launched, and the market response was obviously not as good as before. Deutsche Bank's channel survey shows that the first-day e-commerce sales performance of this series was only 30% to 50% of that of the previous major new IP products launched in 2026, and the second-hand price of some regular styles even fell below the official selling price of 159 yuan.

New IPs are still growing, but they have not yet filled the gap left by the overall slowdown in growth. In the first half of 2026, the revenue of the Starman IP increased by 580.6% year-on-year. But at the performance meeting in August, founder Wang Ning admitted that the company is unlikely to achieve the 20% growth target set at the beginning of the year.

Chen Momo believes that the market did not bet that LABUBU would become an "evergreen tree", but expected Pop Mart to become an IP incubator that continuously produces hit products, continuously launch new IPs, and then distribute them through global channels. But so far, this ability to continuously replicate hits and expand distribution with momentum has yet to be further verified.

The problem for Laopu Gold is whether its profits can continue to grow steadily.

In the first half of 2026, Laopu Gold's revenue was 19.808 billion yuan, and its attributable net profit was 4.267 billion yuan, a year-on-year increase of 88.2%. But when broken down by quarter, performance fluctuations emerge. At the end of February this year, Laopu Gold raised the price of its products by about 20% to 30%, which triggered a round of centralized purchases before the price increase. Calculated backwards based on the first-quarter performance forecast range and the half-year report, the net profit in the second quarter was about 467 million to 667 million yuan, far lower than the 3.6 billion to 3.8 billion yuan in the first quarter.

Chairman Xu Gaoming explained at the performance meeting that the international gold price corrected significantly in the second quarter, coupled with the weakening of the consumer market, the company chose to wait and see temporarily and did not rush to adjust its business strategy. He said that the average monthly profit in the second quarter still exceeded 200 million yuan, which was in line with the company's expectations.

Brokerages are more cautious in their judgments. In August 2026, Kaiyuan Securities lowered Laopu Gold's attributable net profit forecasts for 2026 to 2028 from 9.012 billion yuan, 12.305 billion yuan and 15.537 billion yuan respectively to 6.535 billion yuan, 6.743 billion yuan and 8.003 billion yuan. According to the adjusted forecast, Laopu Gold's profit growth rate in 2027 is only about 3%.

Laopu Gold's brand premium still exists, its overseas revenue maintains rapid growth, and new categories such as gold ornaments are also contributing incremental income. However, part of the past rapid growth benefited from the rise in gold prices and centralized purchases before price adjustments. Next, it needs to prove that even without the promotion of these factors, repurchases, new products and channel expansion can still support performance growth.

The problem for Mixue Group is that as more and more stores open, profits do not rise but fall.

In the first half of 2026, Mixue Group's net profit was 2.319 billion yuan, down 14.7% year-on-year, marking the first year-on-year decline in half-year profit after its listing. As of the end of June, the group had 63,987 stores worldwide, a year-on-year increase of about 20.7%, but revenue only increased by 2.3% in the same period.

The store opening speed is also slowing down. In the first half of the year, Mixue Group opened 5,455 new franchised stores, 2,266 fewer than the same period last year; the net increase of franchised stores was 4,166, lower than the 6,534 in the same period last year.

Image source / Mixue Bingcheng official website

The management admitted at the performance communication meeting that the average turnover per store of the entire group and the main brand Mixue Bingcheng both recorded double-digit declines in the first half of the year. Calculated based on the sales revenue of goods and equipment and the average number of franchised stores, the half-year purchase amount of a single store from the headquarters decreased by about 17.9% year-on-year.

This change touches the core of Mixue Group's business model. The group's revenue mainly comes from selling raw materials, packaging materials and equipment to franchised stores. In the past, the more stores there were, the more goods the headquarters sold; but as stores continue to be densified, the business of a single store is more likely to be diverted, and the incremental revenue brought by new stores may gradually shrink.

At the same time, expenses are still rising. In the first half of the year, Mixue Group's sales and distribution expenses increased by 22.9%, and administrative expenses increased by 39.4%, both significantly faster than the revenue growth rate. The company explained that part of the expenditure was used for product quality upgrading, brand building and store operation support.