Short sellers betting against toymaker Pop Mart — even though they are losing money

Short sellers double their sales Pop Mart International Even as the recent rebound in share prices makes bearish bets on the Chinese toy maker increasingly risky.

According to S&P Global Market Intelligence data, short-term interest in Pop Mart increased from 11.3% in April to 12.67% as of Tuesday.

Pop Mart shares had fallen by more than half from their peak in August last year to 153 Hong Kong dollars ($19.5) as of Tuesday. But the stock has rebounded somewhat recently, gaining 8 percent since its year-to-date low in April; The Chinese toy maker remains one of the 10 most shorted stocks listed in Hong Kong, where short sellers are now losing ground, according to the market intelligence firm.

“Pop Mart stands out as the only stock on the list where shorts are losing money,” said Matt Chessum, managing director of equity and analytical products at S&P Global Market Intelligence, citing “resilient” consumer demand and the increased risk of a technical short squeeze as the stock rebounds from its April lows.

The bets on permanent decline reflect deepening tensions between the bulls and a large group of skeptical traders. Bears note cooling demand signals in key overseas markets, with concerns centering on diminished appetite for the Labubu toy line, and question whether Pop Mart can sustain its runaway growth; The bulls responded with new product launches and attractive valuations.

Lydia Ling, Citigroup’s director of equity research, maintained her buy rating in June but lowered her target price to HK$263, citing long-term growth potential based on Pop Mart’s intellectual property development capacity and overseas expansion, and flagged short-term overseas volatility as a headwind.

Melinda Hu, consumer equity research analyst at Bernstein, maintained an underperform rating with a target price of HK$181. Management’s tacit admission that there is “less savings” in teams, fan bases and retail infrastructure in overseas markets compared to China confirms the underlying weakness, Hu said in a note released after Pop Mart’s first-quarter results.

“The management’s ‘pit stop year’ framework, emphasis on quality over quantity and organizational restructuring indicate that growth is slowing down,” Hu said. Pop Mart president and CEO Wang Ning used the pit stop analogy. company’s 2025 annual reportIt describes the previous period of expansion as “F1-style” rapid acceleration and pegged 2026 as the year of “pausing in the pit lane to refuel and change tyres” as the company consolidates its gains and pursues more sustainable growth.

Pop Mart shares are currently 92.4% exercised, according to S&P Global, meaning nearly all shares eligible for borrowing have already been loaned out, making it harder and more expensive for new bearish bets to enter positions, increasing the risks to short sellers.

While fees remain high, “new short positions will become more challenging to execute,” Chessum said, adding that the profits from short positions will be limited due to the cost of borrowing.

— CNBC’s Justina Lee contributed to this report.