China's 'Blind Box' Bubble

 China's 'Blind Box' Bubble

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Chinese toy maker Pop Mart has seen its stock more than double since its IPO three weeks ago.

Chinese toy maker Pop Mart has seen its stock more than double since its IPO three weeks ago.

Photo: Chen Yuyu/Zuma Press

A Chinese craze for “blind box” toys has caught fire in the stock market, and drawn some unwelcome attention from the government.

Last week, official state media organ Xinhua criticized the new craze for “blind boxes,” which contain a collectible toy with the exact design a mystery to the buyer. The format drives repeated purchases, especially from young people who want to get their hands on their favorite toys.

Xinhua isn’t amused. “Once you enter into the abyss of blind boxes, your wallet will become like a stranger passing on the street,” it said. The article compares the phenomenon to gambling and urges tighter regulations.

Blind-box maker
Pop Mart International Group
has kicked off a stock market frenzy too. Its stock has more than doubled since its initial public offering three weeks ago, valuing the company at $14.7 billion—higher than
Hasbro’s
$12.9 billion or
Mattel’s
$6.1 billion. Pop Marts’ revenue grew nearly 1,000% from 2017 to 2019 and its blind boxes earned a gross profit margin of 70.5% in the first half of 2020.

But scrutiny from state media is rarely a good thing: Pop Mart’s shares have lost 5.6% this week.

Write to Jacky Wong at JACKY.WONG@wsj.com