Leading toymakers Pop Mart and Miniso stock prices plummeted after state-run media Xinhua commented that regulators should further steer the blind boxes industry away from unbalanced development.
A Xinhua article pointed out that, despite the surprises that come in the moment of unboxing, the frenzy of blind boxes breeds addiction and a gambling mindset, especially among young people. Many blind box enthusiasts spend a fortune on these toys every month.
Experts suggest, according to the article, that teachers and parents should guide teenagers towards healthy spending habits to avoid consumption traps. In the meantime, regulators should further monitor the industry to prevent its unhealthy influence on teenagers and society at large.
In the wake of the article, the blind box giant Pop Mart’s stock price plunged almost 10% on Monday with an intraday low of 16%, and nearly HK$1.2 million evaporated.
The trend has also affected Miniso, the budget retail giant who just rolled out its new TOPTOY offshoot in Guangzhou, marking its entry into the global toy market. Miniso’s shares dropped more than 7%.
Concerns have followed the sudden popularity of blind boxes among young people due to a lack of regulations and its similarity to gambling and the prices being driven up.
Just last week, netizens revealed that the blind boxes they bought at a Pop Mart store had yellow glue at the seal, indicating that it was a repackaged box. Following an official investigation by Pop Mart, the company admitted that the repackaged sale of blind boxes was true, and said that all the employees involved have been dismissed and will never be re-hired. They said the company will improve its store service process.
Pop Mart’s outstanding financial performance has drawn a lot of attention. From 2017 to 2019, Pop Mart’s revenue was 158 million yuan, 514 million yuan, and 1.67 billion yuan, respectively, with a compound annual growth rate of 225.4% and 227.2%. Net profits were 1.56 million yuan, 99.52 million yuan and 451 million yuan.
Despite the pandemic’s influence, Pop Mart still saw impressive performance in the first half of 2020, with revenue of 818 million yuan, a year-on-year increase of 50.5%, and net profit of 141 million yuan. In the first three quarters of 2020, Pop Mart’s total revenue was 1.54 billion yuan, a year-on-year increase of 49.3%.
The lucrative blind box industry has attracted other participants like Miniso.
Miniso announced the launch of its new brand TOPTOY. The flagship store officially opened in Guangzhou Grandview Plaza on Dec. 18. TOPTOY positioned itself as a collection store for trendy Asian toys, focusing on young consumers, with products covering blind boxes, trendy toys, Japanese and American anime and comic figures, dolls, assembled models, building blocks, etc.