What gives you comfort in keeping US equity?
Trump put is not something everyone can accept.
Fed put is less certain if war keeps inflation high.
What else?
Buffett put – Berkshire’s massive cash position to support any big dip.
SpaceX/OpenAI IPO put – world’s wealthiest people/investors won’t let market close for their pay day.
In a previous post, I said unpredictability is what Pop Mart investors must shoulder, but is there any number that can make investors slightly more comfortable?
Let’s try Labubu adjusted P/E and we need Labubu adjusted earnings.
Labubu (The Monsters IP from Pop Mart) revenue was over 14 billion rmb in 2025.
The other “good” IPs were about 3 billion rmb revenue.
We can assume there is 10 billion “extra” revenue that Labubu is earnings.
We can also assume Pop Mart’s marginal operating profit margin is 50%. Then the “extra” operating profit is ~5 billion rmb.
Subtract that from 2025 operating income will give you about 12bn rmb in Labubu adjusted operating profit.
With 25% tax rate, Labubu adjusted earnings is about 9bn rmb.
At 150 HKD per share, Pop Mart is at ~20x Labubu adjusted P/E.
Pop Mart stock plunged after earnings – down 23% on Wednesday and down 10% on Thursday.
Pop Mart’s forecast of 20% or so rev growth in 2026 is lower than what is expected and is a sharp decline after 185% growth in revenue in 2025.
Labubu is still one of the hottest fashion toy IP worldwide with no competitors I think.
However, investors can’t reliably forecast future rev and thus cash flows of Pop Mart as nobody knows whether Labubu can sustain its mojo / for how long and how far.
Unpredictability is usually a negative thing, but people disregarded it as a risk when Labubu was in rapid growth mode. The “upside” unpredictability blinds investors – they liked it actually.
Now if you really want to be an investor in Pop Mart, you need to be comfortable with this inherent unpredictability.
One way to think about this is that Pop Mart is ultimately a very good channel like Tencent. Whatever it incubates and sells, its stores will sell them well. Pop Mart stores are the product of Pop Mart, alongside the IPs like Labubu.
However, to say Pop Mart stores is like WeChat is too much a compliment for Pop Mart so far. Network effect that is so strong and unique that WeChat really doesn’t have a competitor.
Tencent Music $TME will no longer report the operating metrics on a quarterly basis such as Monthly Active Users (MAU) for online music services and Number of Paying Users for online music, starting from next quarter.
The stock dropped 24.65% in a day, with other concerns like more competition from ByteDance’s Soda Music.
It’s almost a sure thing that stopping disclosure on key operating metrics will make stock price under pressure.
A very similar case is Netflix in 2024.
In April 2024, Netflix announced it would stop reporting quarterly membership numbers and Average Revenue per Member (ARM) starting in 2025.
Netflix shares fell ~8% the day after the Q1 2024 report.
Here is the last report on these operating metrics. 
The company argued that subscriber count is no longer the best indicator of health due to new revenue streams like advertising and “extra member” fees.
Netflix still discusses those in shareholder letters and gives financial guidance, like this for 4q25 earnings.
While $TME gave similar explanations, it didn’t give investors 4 quarters to adapt.
As advertising and other IP related offerings scale, and as we offer multi-tiered membership for online music subscriptions, the business impact of each paid membership varies. As a result, we are increasingly focused on revenue and profit as our primary performance indicators.
Given this evolution, starting from next quarter, we will discontinue the disclosure of certain quarterly operating metrics, including online music MAU, paying users and ARPPU.
We will instead report the number of total paying users across our music services annually, as of year-end.
Nongfu is ~25x 2026 P/E with ~13% 2027 EPS growth
PopMart is ~15x 2026 P/E with 27% 2027 EPS growth
Nongfu enjoys almost 4 times PEG vs. PopMart.
PopMart sounds like fashion – however, I see no real competitor in its space.
Nongfu sounds like a staple that can only grow – however, I see more competition here than what investors may assume.
How much losses has Nio made over the past few years?
Over 80 billion rmb, from 2020 to 2025.
In the worst years, Nio lost over 20 billion rmb per year.
Meanwhile, investors are finally seeing the light at the end of the tunnel – Nio made 0.5bn rmb in operating profit in 4q25, thanks to rising sales of large premium SUVs, which carries higher gross profit margin.
You need to take it with a grain of salt though.
1/ Fourth quarter is usually a good quarter
Indeed, Nio only guided non-gaap breakeven for full-year 2026.
Well, at least it’s not accumulating more losses.
2/ Peers like Li Auto, which was profitable before, made losses again in 3q25
It’s the nature of auto industry to be cyclical, due to product cycles etc.
3/ Leaders like Tesla is already making money other than selling cars
If selling EVs is such a good business, Tesla should do more, rather than “diversifying” into FSD, energy storage etc.
Market has shifted to favor more traditional businesses including Walmart (also read Old economy is new and new economy is old).
Walmart stock is up more than 20% since Q4 2025, while Nasdaq index has returned LST.
In the most recent earnings, Walmart gave FY2027 outlook which is considered as conservative – adj. EPS $2.75 to $2.85 is below consensus of $2.96.
Here I revisited the guidance vs result in the past few years, using the annual guidance issued at 4q specifically.
Meanwhile, two other stories are underpinning the Walmart story.
1/ Higher margin and technology-driven business is growing fast, including ads, memberships, 3rd-party listings. Previous years’ investment entering “return” phase and capex, guided at 3.5% of net sales, is expected to peak this year.
2/ K-shape economy and tariffs are pushing more consumers to Walmart. High-income US consumers to “trade down” while Walmart is also the safety net for the “Downward Arm”.
AI has created chaos in many areas, including the gaming industry.
Google Genie was a case in point a few weeks ago.
TakeTwo (-10%), Roblox (-10%), and Unity (-20%) all down after Google debuts AI Game Creation Tool
byu/Rukuba inValueInvesting
However, I don’t think code alone is what makes a game successful.
Many successful games are like basketball or soccer.
It’s a cultural and social thing.
Shooting is fun but that’s not basketball is all about.
I bet AI can create and update new games easily but it’s the same for sports.
There can be new “sports” coming up – they can be fun to play as well. However, the number of players, the audience, the whole league/industry around a classic sport are the moat.
In the pre-AI era, I don’t think the studio that has top-tier coders is guaranteed to have blockbuster games.
$RBLX $TTWO $TCEHY
AI is driving up inflation like those shown in the December PCE – Recreational goods and vehicles (incl. personal computers) prices are up due to higher memory prices.
Higher PCE is limiting Fed’s ability to lower interest rate, which is needed to support US economy and US equity.
I think we shall see this dilemma for a couple of month – faster AI development means higher interest rates for longer, while slower AI development should hit sentiment as well.
There are many theories out there and one of them is to compare with the 2021-2022 bitcoin crash.
From Nov 2021 to Jan 2022, bitcoin price crashed ~50%
From Apr 2022 to Jun 2022, bitcoin price crashed ~63%
Things are not the same this time – back then Fed was entering a rate hike cycle, Russia-Ukraine war/conflict broke out, and LUNA crashed.
Let’s say this time things are less severe. Fed is not going to raise interest rate anytime soon, although it may shrink balance sheet, plus major wars may be ending.
From Oct 2025 to Nov 2025, bitcoin price crashed ~33%
Let’s call the scaling ~2/3 vs 2021-22.
Then the second crash should be down ~42%.
In Jan 2026, bitcoin price was around $97,860.
To crash 42%, it would be ~$56,759.
We saw recent low at $60,074 on Feb 6, which is ~5% from our calculation above.
See previous posts on bitcoin