Hype over 'Royal Oak': What collaborations like Swatch and Audemars Piguet truly bring to a stock

A recent collaboration between Swatch and luxury watchmaker Audemars Piguet has created a frenzy in the secondary market, with limited-edition "Royal Oak" models fetching up to 5,000 euros on resale platforms, a stark contrast to their retail price of 385 euros. This partnership has generated considerable buzz, but its long-term impact on Swatch's stock performance remains a subject of debate among analysts.

Despite the initial hype, Swatch's stock has faced scrutiny. Some analysts attribute initial stock dips to poor sales organization, while others point to broader issues. Steven Wood, founder of activist investor GreenWood, criticized Swatch in February for losing relevance, stating, "The problem is not whether they make great watches. The problem is that they are no longer relevant." A Morgan Stanley report, which Swatch disputed, highlighted market share losses and problems within its 16 brands, including Omega and Longines.

While Swatch's stock has increased by approximately 18% year-to-date, reaching around 203 Swiss francs, its performance lags significantly behind competitors. Japanese brands Seiko and Citizen have seen gains of 320% and 256% respectively over the past five years, and luxury group Richemont has grown by 80%. Swatch, in contrast, has seen its stock value decline by 20% over the same period. Furthermore, Swatch's net profit for the 2025 fiscal year plummeted from 219 million to 25 million Swiss francs due to a strong franc and high production costs, although the company forecasts a "very positive" development for 2026. Most analysts currently recommend selling Swatch shares.

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The problem is not whether they make great watches. The problem is that they are no longer relevant.