Motley Fool Money - The Labubu Economy

Episode Date: September 16, 2025

Blind boxes, dopamine hits, and “adorably ugly” IP - today Emily Flippen alongside analysts Sanmeet Deo and Asit Sharma unpack the collectibles economy and the anatomy of a craze. We ask who actually wins when crazes hit the market, evaluate the value of owning or licensing intellectual property, and wrap up with a lightning round of stocks we’d use to play a craze. Companies discussed: PMRTY, HAS, FNKO, BILI, EBAY, META, COST Host: Emily Flippen, Sanmeet Deo, Asit SharmaProducer: Anand ChokkaveluEngineer: Bart Shannon Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. Learn more about your ad choices. Visit ⁠megaphone.fm/adchoices"  Learn more about your ad choices. Visit megaphone.fm/adchoices

Today on Motley Fool Money, we're breaking down the collectibles economy and how businesses turn plastic into profit. I'm Emily Flippen, and today I'm joined by analysts Sanmideo and Asset Sharma to discuss the latest craze in the industry of collectibles. The booboos. Along the way, we'll dig into how the hype cycle has helped perpetuate these fats and explore the successes and failures of previous collectible manias to help evaluate how investors should best play it.

start, let's clarify the anatomy of what a craze is. Sadmeet, you've lived through more than one craze, and regardless of what industry it is, you said there's always some similarities. Now, before we get into exactly what a Lubu-boo is, because I'm still not sure I know, what actually is a craze? And how is that different than just like a sustainable trend? So, craze is really an intense collective impulse that burns incredibly bright, often for a very short time. Think of it like a flashfire in consumer marketplace spreading virally before quickly burning itself out. You know, we've seen it time and time again with beanie babies in the 90s, fidget spinners a few years ago. And the driving force of this is really a powerful cocktail of human psychology.

You have FOMO, our desire for novelty, and the simple need to feel like part of the group. You know, today's crazy has become more sophisticated as companies pull on specific levers to build the hype, such as gamification of buying, engineers scarcity and exclusivity, community, and character and aesthetic design. And I think about what defines a craze personally versus something. that is maybe more sustainable. It's like that desire that you just mentioned, that almost capitalizes on our human nature to not want to miss out on things, right? There's always these little, I don't know if to call it gamifications, but elements that are almost taking advantage of human psychology, where if you feel like you're not participating, you are actively falling

behind. Absolutely. You know, they're not just a transaction anymore. It's like you said, it's a game. It's, it's, they're creating a dopamine hit from like a reveal like you would in a blind box where you're like, what am I going to get? and you open it up and you're like, wow, this is what I wanted or wow, this isn't what I wanted. You know, the companies release limited additions and collaborations, creating like a sense of urgency to buy. And then you have social media, which is like rocket fuel, which causes even more hype. So, you know, none of this really works unless you have like an appealing product,

you know, a cute, lovable toy character like Hello Kitty or adorably ugly character like Luboo. You know, it's really about creating an emotional connection with those products. Yeah, I always struggle with that difference between what is technically cute and what is technically ugly. And Lubu's unfortunately fall into that middle ground for me, although maybe a little bit more to the latter. Asset, speaking of things that may be a little bit cuter than a little boo-boo, but something that we all maybe fell for back in the late 1990s, that is the beanie mania. But is there really, when you look at the industry, something fundamentally different about the market for collectibles or crazes in 2025 versus even just a handful of decades ago? Emily, first I want to protest. I never fell for Beanie Mania. kidding, kidding. I actually did for a short time I did. Well, so when I look back through the lens

of crazes and fads, I think the entire collectible cycles has sped up over the last three decades. Consumer psychology, that's not changed one bit. For instance, if we look at the time it takes for someone to come up with an idea all the way to distribution, that time frame has shrunk dramatically due to the ease of designing a product these days, contracting with a third party to manufacture it and marketing it. Hello, viral algorithm. Also, drop shipping has become so simple. I also note that the average length of a craze or fad is so compressed. The craze portion of the Beanie Baby's fad lasted four years, Emily, from 1995 to 1999. That would count as insane longevity in today's world. Also, past decades had a really difficult playing field for

creators. It's more level now. You don't have to be. You don't have to be a really difficult playing field for creators. it's more level now. You don't have to be Pop Mart. Cheap tech tools are there for the three of us to start our own fad. I hope you guys will join me. And we can facilitate these profits by employing those blind box strategies and of course using the phenomenon of Chinese drop shipping. Although today now we might have to be paying a little bit of de minimis tax on that shipping. Hey, with these crazes as crazy as they are, I think a lot of people may be willing to do exactly that. But I mean, outside of just the existence of these fads, what else have you noticed? because the world is very different today than it was in the past. I mean, the internet being one a good example. Right. The internet has made a more formalized economy out of the collectibles system. So we have these exchanges like Stockex where, Emily, you can buy me a pair of Jordan 1, OG Chicago 1985s for $45,000. Right after we finished taping today. Sure. I'll take one too. Throw one in for son meat. Digital collectibles, that's also a newer feature of the landscape,

although NFTs really haven't fulfilled their early hype, they're showing some staying power within a smaller group of enthusiasts, which brings us to the rise of subculture collectibles. TikTok, Reddit, Pinterest, Instagram, you name it. Every major platform facilitates a collectibles culture for small groups of like-minded enthusiasts. There is a craze for everyone, even for me. I won't name the one that has obsessed me, but the way that we buy and trade these objects we obsess over really reflects our current

plugged in culture. And I know that a lot of our listeners are probably thinking to themselves. That's exactly what I'm doing with a lobooboo right now. And stick with us because up next I will finally get to what a lobooboo is and why so many people are interested in collecting them. We'll see you after the break. In a world full of noise, long-term thinking stands out. On the Capital Ideas podcast, Capital Group leaders explore the decisions that matter most in

investing, leadership, and life. It's a rare look inside a firm that's been helping people pursue their financial goals for more than 90 years. Listen to the Capital Ideas podcast from Capital Group, published by Capital Client Group, Inc. La Boo-boos. It's a word that perhaps mean absolute nonsense to many of our listeners, but to others, I think it probably invokes excitement. In my case, I think it invokes a lot of skepticism. Of course, that is my core personality traits. But this is a plush that has become incredibly popular owned by a Chinese IP giant known as Pop Mart. Calling it cute to our earlier point, I think, is being perhaps a bit generous. But regardless of what you think about how Labibu's look, people are increasingly demanding

on collecting them, whether that be for prestige, FOBO or a potential rise in value. Sani, when you think about Labuboos and the parent company that owns Labibu's in Pop Mart, is this a, I guess, a trend of fashion? is it even investable or is this truly just our next craze? Well, you know, Pop Mart, while many may think is just a toy company, it's actually really an intellectual property company. You know, they are the ones that own the Lubu brand. They worked with the creator Kassing Lung.

You know, they were traditionally a licensing, they licensed IP of like known characters. And then they've transitioned more into essentially acting as the whole design, marketing, production of these, of these properties. So by owning the property IP like Labibu, Mali, Skull Panda, other ones that they have,

you know, they aren't paying massive licensing fees. You know, they, in 2023, their proprietary IP accounted for over 80% of the revenue, which is a huge shift from the early days when they were just licensing and products. You know, they have a multi-channel sales model of 500 plus stores and more than 2,000 Robo shops, which are basically high-tech vending machines,

where you could just get a Lubbubu as if you were to get a Coke. And they're planning on aggressively opening in the U.S., Europe, Middle East. So they're making a name for themselves. For investors who are looking to ask themselves, well, maybe I don't want to own a Lubbubu. I want to own shares of Pop Mart. This is a company that is based in China. It is listed on its main shares on the Hong Kong Exchange,

but it does trade over the counter here in the United States under the ticker, P-M-R-T-Y. Now, personally, I would hesitate against telling anybody to buy shares of Pop Mart today because I see how much shares have run up. And I also can't help but think to myself that surely Pop Mart and Labuboos, this is just a one-hit wonder, right, Sun Meat? I think it's just a one-hit wonder. The company actually only makes 35% of the revenue from actual Labuboos or that product line. They have three other brands, which each of them make about a billion in R&B in revenue each. and, you know, they're expanding in new categories like plush toys and other things.

You know, but their revenue has been explosive. Their growth has been explosive. Revenue is grown from 2.5 billion R&B in 2020 to over 6.3 billion R&B in 2020 to 13 billion R&B in 2024. And now they're running at a 13.9 billion run rate in 2025 for over the first half. And they're profitable. You know, they've grown to close to 4.6. billion in R&B over the first half of 2025. That's 363% over the last half year over year.

So the stock, too, has been a rocket ship. Just over the past year to date, it's been up over 200% resulting in a $43 billion market cap, making that eight times bigger than Mattel and four times bigger than Hasbro. Will it all last? You know, I think they could successfully expand the world of Lubbubu beyond just collectible figures, you know, into storytelling, animation, games. You know, if they can do that, then they can kind of create something valuable. And I'll leave you with one brand that we know very well, Hello Kitty, and how it expanded

from just being one character to a cultural phenomenon. And I didn't even know this, but it's one of the highest grossing media franchise in history with an estimated $80 to $90 billion in lifetime retail sales. Will that happen for Pop Mart and Lubbuboos? Not sure. Can we predict it? Absolutely not. You know, Sun Meat, you've laid that out so well. And Popmark, for me, is an example of both the opportunity in this market and it's crazed-driven cyclical nature.

Pop-Mart was an early adopter of this blind box strategy that we talked about, so not knowing what's in the box until you buy it. And I think out of those 500 stores, you mentioned, they had maybe 300 by the 2010s. They had thousands of fending machines, the snazy online presence in China. and that sort of mapped out for them all their sales and distributions and logistics channels. They were pre-built right in time for the first big craze that they capitalized on, which was the Mali craze of 2016. This was a concept by Hong Kong designer Kenny Wong. Now, even though it creates IP alongside designers like Kenny Wong, pop art has a very traceable flow of ebbing, peaking, ebbing again, inventory.

At the end of the day, it's extremely hard. to consistently capitalize on craze-driven collectibles, which I think is a little bit of the hesitancy I hear in Emily's voice. Both trend observers, I'll note, and ethologists who are people who studied the animal kingdom, the behavior of animals, 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 Laboooo craze, to pronounce Laboooo the way Emily did, it's sort of fading. Stock price has off of those great highs. There are many stories in the press that sales are faltering a bit. Now, I do think Pop Mart has a great opportunity to use this windfall from Labubu to invest in new

properties. Their cash balances have doubled in short order to about 12 billion R&B since the beginning of this craze, which is just over a year's length and time, although inventorying payables have increased also. So while the shine has faded somewhat from earlier, crazes that made good money off of, like Molly and Skull Panda, those have become reliable in evergreen brands. To me, what comes next is the question. And that's always the question with collectibles companies, the ones that are seeking to spike interest, you know, through initial scarcity and that blind box demand. Your positivity on from both U.S. at Ensign meet, I mean, it's reassuring to me. And I love the comparisons here to the other kind of licensed IP plays that

have succeeded and Hello Kitty, who has created an entire brand around a single character. And I do have a tendency as an investor to let these things go and be hyper-focused on what could go wrong as opposed to what could go right. But there is still some part of me that can't help but think Funko-pop, Funkop, Funkop, Funkop, when I look at this business. And there's a difference there, like you mentioned, semi-between the licensed IP versus the owned IP. But FADs come and go so quickly. And I have historically done such a poor job of predicting if and when that dam will break. Up next, we're moving over to past crazes and what investors can learn from them. Stick with us. These days, I'm all about quality over quantity, especially in my closet. If it's

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I mean, Sammy, do you really think there's an effective way for an investor to play the industry and actually make money? I mean, it's a tough industry. You know, outside of buying the originary of the craze, like Pop Mart for Lubbuboos, which is highly risky and possibly not recommended, there's some diversified ways. Like if you're an invest in Mattel or Hasbro, you know, sometimes some of their franchises start to revive, think Barbie, you know, and do well. you know, they also have a portfolio brand, so you're not subject to a one-hit wonder risk.

Obviously, there's also the picks and shovels way where you can invest in marketplaces where these things are sold in the secondary market, like eBay, Etsy, I think, you know, or, you know, other popular places. Sometimes the retailers, Target, Walmart, big retailers, you know, sell some of these products. They get a short-term bump in sales, although it may or may not have, you know, much of a impact on their, on their, uh, massive amount of sales. So it's a difficult place to invest in, but definitely worth exploring what's out there. When I worked on our cannabis portfolio here at The Fool, and when I thought about allocational, it's kind of a similar mindset to what you just mentioned some me, which was, I was not opposed to getting some direct exposure to these businesses that were highly risky, very fatty, could go to zero or go to 100, so to speak, but at the same time, mixed it with

businesses like Home Depot and others that kind of made a more diversified safe board. So I love that way of playing it if somebody is looking to capitalize off these fads, but also maybe doesn't want to potentially overexpose themselves. But Asset, I already expressed how I feel about the pop parts of the world. It's caused me to lose out on hundreds of percentage points of return. I'm sure. Surely you have a more positive take on the industry than I do. Well, Emily, I'm going to be completely honest here. Let's avoid these types of businesses. There are much easier places to invest. I personally haven't found a lot of success playing this industry. You know, for the companies that deal in physical goods, there's usually a lot of

excess inventory to work off once a craze dies down. And this makes stock investments in collectible businesses just like a bumpy ride. And for models that lean towards licensing, remember, there's a cost to procuring intellectual property and trademarks that are going to generate revenue, especially if the deals are exclusive. Build the IP like Pop Mart if you can. At any rate, All these companies have to be pretty good at identifying the right brand properties. You know, you've got a nail product and distribution, not to mention the timing to capitalize on a craze with your inventory and your sales channels. To do this consistently is just such a tall order.

And, Emily, I'm having deja vu of sending you a slack late one workday saying, man, I am so interested in this company, Funko. I think it's got the perfect formula between inventory and licensing its intellectual property It's got a great warehouse automated systems. This is going to be the next big collectibles thing. And I recommended that in a service and I think sold out of it maybe nine months later. You know, as Sondme mentioned, marketplaces may be the better place to look, you know, buy the company that gets a cut out of every collectible transaction.

Gamblers and stock traders already familiar with this concept. The house always wins. Well, you set me up nicely here, Asset, for my kind of lightning round last question before you wrap up today. podcast, and that is if you were going to play this trend, right? Which collectible or cray stock you would buy in order to play it? And I'm happy to start. It's in that similar vein that both of you all mentioned, although maybe a little more out there. This is a Chinese company known as Beely Beely, the ticker is B-I-L-I. This is an old Roll Breaker's recommendation that was actually sold a number of years ago. But this is a marketplace or video live streaming place, I suppose,

for Gen Z consumers in China. And you can kind of imagine it like a hybrid between TikTok and YouTube. And it doesn't directly benefit. So it's much more of the picks and shovels play. They aren't actually a marketplace in the sense of where you trade or exchange Labooboos, so to speak. But it does benefit from having a really young audience who tend to be the people who benefit and hype up these types of crazed trains.

And the stock has done incredibly well as engagement on the platform has soared. I guess I'll pop to you, Sandmeet. Are you popping in on Pop Mart? No, I mean, you know, look, in honor of our rule breakerness, Popmar is one of those names that, you know, if you make it a small, speculative position, a broader portfolio, it could be worth, worth trying to try to risk it. But I wouldn't take a big, big bet on it. What I would do is, you know, picks and shovels, which I love to play. And the ultimate for this is eBay. You know, they are the world's marketplace.

It's almost like a great secondary market for anything. any kind of collectibles, comics, plush toys, anything you can think of, high volume, deep ecosystem, authenticity, you know, you're safe and secure in your payments and dispute resolution. So it's a great place to go to buy and sell these things. Another place is kind of another play is, you know, meta because lots of marketplace, you know, secondary markets are being done on their marketplaces section. and it's growing in, you know, in volume and interest. The tickers for those are eBay, E-B-A-Y and Meta-M-E-E-T-A. The great tickers that match exactly their name. Aesid, I'm looking at my show notes here,

and I think I know the company you're going to mention, who also has a ticker that matches its name. Company that's already playing around the margins of the collectible space with its exclusive deals on high-end watches for some of its affluent members and wildly popular deals on gold bars. Yep, you guessed it. This is Costco, symbol C-O-S-T. I think management has realized that they have a very powerful new revenue stream.

They can direct a lot of dollars in member interest towards sort of the exciting thing of the month. And what is that, but a collectibles type of trend. Now, Costco is selling about $200 million in precious metals to its membership every month. So you can see the power of directing this purchasing power at something new in the future. I think we're going to see more of this. Next stop, the famous Costco $1.99 pizza slice in plush toy format. You heard it here first, guys. Oh, one of those I can eat and one of those I can.

So I think I know where I'm going to first. But I do think the value of these picks says a lot about this industry. And it's similar to how Lububu's go crazy or whatever the fat is. And there's a feeling of missing out. And I think for investors who will look at the performance of a business like Pop Mart or other collectibles, Funko Pop during its heyday, we'll say to themselves, I'm missing out. I have to get in on this. I have to jump in. And as we know from the inevitable downfall of these crazes, oftentimes there's also an inevitable downfall of the parent company who owns these craze as well. And so I love the idea that sure, that might be an interesting, risky, but small investment for the right investor. But at the same time,

there's so many other more diversified, more stable ways that somebody can get a little bit of exposure and build their portfolio to benefit from this trend while not being dependent upon the trend as well. Samit and Asit, thank you both so much for joining for today's show. Thanks a lot, Emily. Thank you, Emily. As always, people in the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy yourself stocks based solely on what you hear. All personal finance contents follows the Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising to

closure, please check out our show notes. For Sanmideo, Asit Sharma, and the entire Motley Full Money team, I'm Emily Flippen. We'll see you tomorrow.