Motley Fool Money: The Labubu Economy

Episode Date: September 16, 2025
Host: Emily Flippin
Guests: Sanmeet Deyo, Asit Sharma

Episode Overview

This episode of Motley Fool Money dives into the world of collectibles and consumer crazes, with a special focus on Labubu—a wildly popular plush toy character from Chinese IP company Pop Mart. The team dissects the psychological, cultural, and investment dynamics of collectible fads, comparing today’s “Labubu economy” with past manias like Beanie Babies and Funko Pop. They cover how businesses profit from these cycles, how investors might approach the sector, and share both cautionary tales and practical strategies for those tempted to chase the next big collectible trend.

What Defines a Craze?

(00:05–03:06)

• Definition & Consumer Psychology

  • Sanmeet Deyo: A craze is “an intense collective impulse that burns incredibly bright, often for a very short time. Think of it like a flash fire in consumer marketplace spreading virally before quickly burning itself out.” (00:58)
  • FOMO (Fear of Missing Out), desire for novelty, and community belonging are central drivers.
  • Modern crazes use gamification, engineered scarcity, exclusivity, character design, and social media hype as rocket fuel.

• Transactional Evolution

  • Buying collectibles isn’t just a transaction any more; it delivers dopamine hits, especially with “blind box” mechanics where the buyer doesn’t know what they’ll get.
  • Social media amplifies hype, but none of it works without an emotionally appealing product:
    • “A cute lovable toy character like Hello Kitty, or adorably ugly character like Labubu.” (01:57)

Notable Quote

“They’re not just a transaction anymore...they’re creating a dopamine hit from a reveal like you would in a blind box.”
— Sanmeet Deyo, (01:57)

Collectible Manias: Then vs. Now

(03:06–05:41)

• Acceleration in the Modern Age

  • Asit Sharma: “The entire collectible cycles has sped up over the last three decades. Consumer psychology, that’s not changed one bit...that time frame has shrunk dramatically due to the ease of designing a product...and marketing it. Hello, viral algorithm.” (03:06)
  • Drop shipping and cheap tech tools have leveled the playing field for creators.
  • The lifespan of a craze is much shorter today (Beanie Babies’ peak lasted 4 years, which is now seen as exceptionally long).

• Internet & Subculture

  • The Internet has formalized the collectibles economy (exchanges like StockX).
  • Digital collectibles (NFTs) remain niche but persistent.
  • Social media platforms host micro-communities for every conceivable collectible.

Notable Quote

“There is a craze for everyone. Even for me. I won’t name the one that has obsessed me...”
— Asit Sharma, (05:23)

The Labubu Craze and Pop Mart’s Model

(06:56–13:17)

• Labubu & Pop Mart’s Business Strategy

  • Emily Flippin: “This is a plush that has become incredibly popular, owned by a Chinese IP giant known as Pop Mart...people are increasingly demanding on collecting them, whether that be for prestige, FOMO or a potential rise in value.” (06:56)
  • Sanmeet Deyo: Pop Mart is fundamentally an IP (intellectual property) company, not just a toy producer. Its proprietary IPs now make up 80%+ of revenue, reducing dependence on licensing (07:45).
  • Impressive multi-channel sales: 500+ stores, 2000+ vending "roboshops", plans for aggressive international expansion.
  • Revenue has skyrocketed: from 2.5B RMB (2020) → 6.3B (2023) → 13.9B run rate (2025). Market cap now eight times Mattel’s and four times Hasbro’s (09:22).
  • Potential future: Expand to storytelling, animation, and games, aiming for a cultural phenomenon like Hello Kitty.

• Crazes Are Cyclical

  • Asit Sharma: Pop Mart illustrates both opportunity and “craze-driven cyclical nature.” Past hits like Molly and Skullpanda morphed into evergreen brands but the Labubu frenzy is already showing signs of waning popularity and a declining stock price (11:02).
  • Pop Mart has greatly increased cash reserves to reinvest in future hits, but faces rising inventory and risk of reversal as interest shifts.

Notable Quotes

“You know, Pop Mart, while many may think is just a toy company, it’s actually really an intellectual property company.”
— Sanmeet Deyo, (07:45)

“Both trend observers and ethologists...refer to the breaking of a stampede or a craze as the turnabout or the reversal. And already I think we see some evidence that the Labubu craze...is sort of fading.”
— Asit Sharma, (12:13)

How Should Investors Play (or Avoid) Crazes?

(14:34–18:07)

• Direct Investment is High Risk

  • Owning originators like Pop Mart is tempting but highly volatile.
  • Large toy companies (Mattel, Hasbro) offer diversified exposure and can revive old brands.
  • “Picks and shovels” approach: Invest in secondary marketplaces (eBay, Etsy), or platform companies (Meta/Facebook) handling transactions, where “the house always wins.”

• Caution on Chasing Fads

  • Excess inventory and cyclical demand mean most pure-play collectible companies have rocky returns.
  • For licensing-based models, costs to procure and maintain brands can erode margins.

Notable Quotes

“This makes stock investments in collectible businesses just like a bumpy ride...to do this consistently is just such a tall order.”
— Asit Sharma, (16:32)

“Marketplaces may be the better place to look...the house always wins.”
— Asit Sharma, (17:27)

Lightning Round: Favorite Ways to Play Collectibles

(18:07–21:21)

• Emily Flippin: Bilibili (BILI)—China’s hybrid TikTok/YouTube streaming site, not a collectibles marketplace per se, but benefits from young, trend-driven audiences. (18:07)
• Sanmeet Deyo: eBay (EBAY)—massive, deep collectible market; Meta (META)—emerging secondary market in their platform’s Marketplace section. Suggests Pop Mart only as a speculative, very small position. (19:12)
• Asit Sharma: Costco (COST)—on the margins of collectibles, selling exclusive high-end watches and gold bars to members; reflects power of directing member spending to limited-time, hyped offerings. (20:28)

Notable Quotes

“Next stop, the famous Costco $99 pizza slice in plush toy format. You heard it here first, guys.”
— Asit Sharma, (21:04)

Key Takeaways

• Crazes are driven by psychological levers, engineered scarcity, and social media but tend to be shorter-lived today.
• Pop Mart illustrates both the meteoric rise and the risk of decline inherent in craze-based businesses.
• Investing directly in originators of fads is risky—diversification or secondary market (‘picks and shovels’) strategies are generally safer.
• Don’t mistake the excitement of a craze for lasting investment merit. Even evergreen brands are rare.

Notable Quotes (with Speaker & Timestamp)

• “They’re not just a transaction anymore...they’re creating a dopamine hit from a reveal like you would in a blind box.” — Sanmeet Deyo (01:57)
• “There is a craze for everyone. Even for me. I won’t name the one that has obsessed me...” — Asit Sharma (05:23)
• “You know, Pop Mart, while many may think is just a toy company, it’s actually really an intellectual property company.” — Sanmeet Deyo (07:45)
• “Both trend observers and ethologists...refer to the breaking of a stampede or a craze as the turnabout or the reversal. And already I think we see some evidence that the Labubu craze...is sort of fading.” — Asit Sharma (12:13)
• “This makes stock investments in collectible businesses just like a bumpy ride...to do this consistently is just such a tall order.” — Asit Sharma (16:32)
• “Marketplaces may be the better place to look...the house always wins.” — Asit Sharma (17:27)
• “Next stop, the famous Costco $99 pizza slice in plush toy format. You heard it here first, guys.” — Asit Sharma (21:04)

Final Thoughts

The team highlights the excitement—alongside the dangers—of investing in craze-driven businesses. While the temptation to ride the next Labubu, Beanie Baby, or Funko Pop run is ever-present, history and the realities of logistics, inventory, and fleeting tastes present huge risks. Smart investors are reminded: sometimes, the surer bounty goes to those quietly “selling the shovels.”