Viral watches from Swatch are in record demand. What about the stock?

Consumer reaction to sales of the new Royal Pop pocket watch - a joint model of luxury Swiss brand Audemars Piguet (AP) and mass-market manufacturer Swatch - has been overwhelming for AP CEO Ilaria Resta, Bloomberg writes.

In the first days after the release of the watch, Swatch shares fell in Switzerland, as investors and experts were disappointed by the chaos surrounding the release (huge queues in front of offline stores and customers' interest in immediate resale of the novelty). Due to logistical problems, the collaboration was even called an "image disaster". However, since then, Swatch securities have recovered the fall - since the release of Royal Pop on Ma. 16, they have already added 2.5%, and since the beginning of the year - in the plus by 21.7%.

Data from the world's largest online marketplace for luxury watches shows record demand for Royal Pop, Bloomberg has found out.

Audemars Piguet also sees the results of the collaboration positively: "In just one day, our website was visited by 10 times more users than in the whole year," Resta told Bloomberg Television.

According to Chrono24, the world's largest online marketplace for luxury watches, on the day of the Royal Pop's release, the number of requests for this pocket watch on the site became a record in its history - it was 2.9 times higher than the previous peak in March 2022. Then Swatch launched another collaboration - with luxury Swiss brand Omega - and released a wristwatch MoonSwatch. In the first days of trading, the average transaction price of the Royal Pop on the secondary market was recorded at €1440, with 80% of sales falling in the €1100 to €1850 range.

At the same time, the demand for luxury watches on the background of sales of Royal Pop has spread far beyond the boundaries of this particular collaboration, Bloomberg points out. Chrono24 representatives reported that demand for another Audemars Piguet watch model - Royal Oak - on their platform since mid-Ma has increased by 40% compared to the average for the previous six months (and Royal Oak is in a completely different price category). In the same period, the number of MoonSwatch inquiries soared 422%, the platform said.

The profile of buyers emphasizes how far this collaboration has reached beyond the traditional watchmaking community, said Chrono24's head of public relations Balazs Ferenczi. "What is particularly striking is the sheer number of buyers entering the watch market for the first time in their lives," he said.

The AP x Swatch collaboration and the companies' joint launch of a pocket watch called Royal Pop generated so much interest from customers that some Swatch stores had to close for security reasons during the first days of sales: huge crowds of people crowded in front of offline stores to buy the Royal Pop. The watch was only available at retail stores.

At the same time, Audemars Piguet's cooperation with Swatch surprised some industry experts, as this exclusive watchmaking house has a high reputation built on artificial scarcity, the agency notes. According to the joint report of Morgan Stanley and LuxeConsult, last year Audemars Piguet sold about 50 thousand watches with additional production capacity for another 20 thousand pieces. For comparison, Swatch brand sold about 4.4 million watches during the same period.

Ma 13, after the announcement of Royal Pop collaboration, analysts at investment bank RBC Capital Markets raised their recommendation on Swatch shares from Sell (Underperform rating) to Hold (Sector Perform), Investing writes. The bank also raised the target price of the company's securities from 160 to 220 Swiss francs. This target implies the growth of shares by 10% relative to the last closing price.

9 of 20 Wall Street analysts covering Swatch securities recommend holding them. Eight of them advise selling, three advise buying.

This article was AI-translated and verified by a human editor