Three Squirrels lost ¥20B in market cap — the snack king that peaked too early

Three Squirrels, once China's most iconic online snack brand, rode the e-commerce boom to a 2020 peak stock price of ¥87.63 and a market capitalisation of over ¥30 billion. Its cute mascots and aggressive Tmall presence made it a household name. But the model that built it — heavy reliance on platform traffic, a sprawling offline store network, and thin product differentiation — began to crack as competition intensified and the cost of online traffic rose.

By 2025, the stock had fallen to ¥19.30, a 77% decline from the peak, wiping out over ¥20 billion in market value. The company closed roughly 710 of its 1,043 offline stores. Net profit fell 22.5% year-on-year in Q1 2025, and cash flow collapsed by 1,075%. Even with over ¥100 million in government subsidies, net profit for the full year was down nearly 70%. Food safety complaints — foreign objects in products — added to the brand damage.

The traffic-driven model broke when platform costs rose; 710 stores closed, net profit halved, cash flow fell 1075%, and ¥20B in market cap was lost.

Three Squirrels was a traffic-driven brand with thin product moats — when e-commerce platform costs rose, the economics of the entire model broke

The offline expansion added 1,043 stores without building the supply chain or quality control to support them, leading to 700 closures and repeated food safety incidents

A brand built on cute mascots and platform traffic is not a brand — it is a short-term marketing campaign, and the bill comes due when traffic costs rise