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If The Royal Pop Follows The Labubu Playbook, Swatch Is A...
2026-05-22 · via All Articles on Seeking Alpha

Summary

  • I rate the Swatch Group a STRONG BUY, behind the transformative potential of its AP x Swatch 'Royal Pop' collaboration, which may open a new product category altogether.
  • SWGAY already boasts luxury-level gross margins (82%+), but unlocking idle production capacity via new product categories is key to the market rerating as a luxury house.
  • The Royal Pop targets an underserved female demographic and could create a new 'fashion watch' category. I see strong parallels to Pop Mart’s Labubu success.
  • Filling spare capacity with Royal Pop sales ($300M+ at 40% margin or $850M+ at 15%) could drive EPS and justify a $50+ price target, offering asymmetric upside.
  • Risks abound: the Royal Pop may be a fad, and the family-run company has historically over-invested in CapEx in Switzerland, while 92% of its sales are abroad, representing a significant forex headwind.
Labubu dolls at a souvenir store

Marcus Lindstrom/iStock Unreleased via Getty Images

The Swatch Group AG (SWGAY, SWGAF, SWGNF) recently launched a very discussed collaboration with Audemars Piguet, a renowned Swiss luxury watchmaker.

Today, I start my coverage on Swatch, arguing how this collaboration has the potential to be a game changer for a

3.35K Followers

Analyst’s Disclosure: I/we have a beneficial long position in the shares of SWGAY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have a small position worth less than ~$15,000 in Swatch via its Swiss-listed stock, not the ADR. I opened this position after researching the company for this article. I may increase or exit completely the position in the next months, depending on developments regarding their commercial strategy.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.