Shares of Danish affordable-jewelry maker Pandora are extremely cyclical. Depending on one’s timing, it is possible to catch a fat multi-bagger, but also to watch it losing 50% or more in a relatively short amount of time. The most recent drawdown from the all-time high is 60% in just about 15 months. Usually, this has been a level to consider going long. Is this the case again?
Summary and key takeaways from today’s Weekly
– Pandora’s recent 60% drawdown looks like a classic bottom.
– This time, however, it is not just a downswing as usual — Pandora undergoes a massive strategic shift.
– With new risks and a valuation that doesn’t reflect that, I pass on this one.
When talking about cyclical stocks, the first sectors that come to mind in most cases would be energy — primarily oil, gas, and coal — and resources like gold, silver, copper, aluminum, steel, agricultural commodities, etc, followed by tech, and discretionary purchases.
A jewelry maker of course is not on the same level like commodities, but it fits in the last category.
The cyclicality of Pandora (ISIN: DK0060252690, ticker: PNDORA) is the result of on one side, of course, cyclical consumer spending behavior, but also on the price development of one key commodity: silver.
At least until recently this was the case, but more on that later.
As silver has left its year-long price range of 20–30 USD noticeably since 2025, trading now around 75 USD, it negatively influences input costs for Pandora. This development coincides with the stock’s all-time high, leading to a harsh drop of 60% until today.
At some point, the bottom should be in for the stock, given that the company is profitable and used to cyclical swings. Management is pursuing a new strategy to turn the ship around.
Will Pandora stock shine again?
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per 27 May 2026 market close – since August 2022
Opening Pandora’s Box
As far as I remember, it was in 2016, already ten years ago, when I for the first time noticed the stock of Pandora. It was during the time of my first corporate job at one of the Big Four accounting firms, when I accidentally stumbled over it. I know that so exactly, because I discussed this idea with a colleague back then.
It wasn’t due to an affection to jewelry — quite the opposite. Today, I do not even own a watch, as I hate them scratching the keyboard or table when typing. As a teenager and adolescent, I tried a few watches, different brands and materials, but it was always somehow annoying and uncomfortable for me so that I got rid of all of them.
My attention for Pandora arose due to the charming hype.
It was heavily advertised back then.
The idea was to buy a cheap bracelet starter kit, leading to multiple expensive follow-up purchases to complement the chain with individual pieces, driving uniqueness and personalization, but also a bit of treasure hunting. The “charms”, i.e. the add-ons, for quite some time were also a good gifting idea or souvenir from vacations.
All in all, a clever strategy to incentivize high-margin repeat purchases.
At least this is the way I understood it, as I, as said, don’t care about jewelry.
But it was hard to miss this hype.
Looking at the long-term chart of Pandora stock, we notice two things.
The stock is quite volatile, and not really made for buy-and-tuck-it-away investors. While +162.5% (plus dividends) is not nothing since 2011, there were better performers. Tikr says +126% or 5.4% per annum on the max chart (+282% or 8.0% per annum including dividends) — anyway, buy-and-hold investors would have lagged the broader market, with all headaches for free.
If you look closer, you’ll notice multiple periods of heavy drawdowns and multi-bagger streaks that are not for everyone.
But this is not even my point.
What I described above — the charming hype — coincided with shares peaking at a level that was only seen again eight year later in 2024, followed by a new all-time high around 1,400 DKK.
Today, PNDORA again trades considerably below the high of early 2025, but also the former top of 2016.
This could have easily been the chart of an exotic silver miner.
Speaking of silver…
Pandora’s items are known to be made in Thailand and of silver.
For long, this has been their hallmark. Silver as a precious metal, combined with high-sophistry craftsmanship gave the jewelry items a higher value compared to cheap alternatives.
But still at affordable prices.
Nonetheless, the fall from grace after 2016 happened due to emerging competition, first and foremost Thomas Sabo. A harsh sales-growth slowdown, margin pressure, and, as far as I can tell as a non-expert in jewelry, simply due to a waning trend / hype, as the chains at some point were full.
Important: it was not due to cost pressure from silver.
Unlike today.
Comparing silver and the stock of PNDORA, it is hard to miss the divergence — silver exploded, PNDORA imploded.
The thing is, this cannot be seen directly in Pandora’s headline numbers.
Or in other words, the current business dynamic alone from a high-level view would likely not warrant such a steep correction of 60% in just 15 months.
Sales are holding up relatively well, despite a slowdown.
Plus, Pandora has hedged the majority of their silver input costs, according to the most recent quarterly results release, at 32 USD per ounce for the year 2026.
Unfortunately, the market does not reward the existing hedges, but anticipates and prices what happens thereafter.
With silver trading three times higher at the moment, it is obvious that after this safety net vanishes, silver costs will brutally hit through the P&L.
In that sense, the reported numbers will react to the new environment.
Looking at sales, we can see that long-term they have been rising, after having gone through some stagnation after 2016 / 2017 and the 2020 one-time drop due to lockdowns for this retail-heavy business.
Gross margins have not only been relatively stable, but even risen over the years, proving there has not been any input-cost pressure from silver, yet. Respectively, management was able to pass some higher costs to consumers.
Or a mix of both.
However, operating margins have suffered.
They never recovered again from the levels of 2016 / 2017, not even close. Hard to believe, but Pandora had operating margins of almost 40% during the charming hype.
Today, they are a third below that level, and, at best, stagnating.
A quick look at the balance sheet.
Pandora took on much debt to buy franchisees to own more stores themselves, and to conduct share buybacks (unfortunately, very much with the cycle, mainly when the stock was trading higher).
The balance sheet was never debt-free, but long-term debt (orange) and short-term debt (green) have risen, while cash has been swinging back and forth without a noticeable rise.
Today, Pandora has net financial debt (without leases) of 10 billion DKK. Leverage is not extremely high with about 2x FCF at current figures — current.
This chart shows how property, plant, and equipment rose meaningfully over the last ten years, as a result of own expansion, but also buying out franchisees.
And here, buybacks.
Share count has dropped from 115 million to 77 million or by about a third. That’s quite a high pace for buybacks, but as said, unfortunately, much of it happened into a rising share price, and especially after 2021 into the all-time high.
At the moment, buybacks are entirely paused.
Let’s now look at the latest results, the guidance, and piece everything together.
The core message is that reported and organic growth has slowed down noticeably again, due to financially challenged consumers. Jewelry is a discretionary category, so consumers are cutting expenditures here first. Reported figures are negatively pulled down by a stronger DKK, so it makes sense to look at organic growth figures — they’re slowing down either.
Operating margins are under pressure, too.
The guidance for 2026 foresees potentially even negative organic growth, but definitely lower operating margins. The current dynamic is clearly to the downside.
As a reminder, this is still with silver hedges protecting the cost side.
Attentive readers have noticed that I marked a phrase in the CEO’s comments above.
Pandora is talking about a multi-material jewelry brand.
Pandora is “diversifying” away from silver, which at first sight sounds like a solid move. But it is not just about expanding offerings for customers to have more to choose from or to position oneself on a higher quality level.
The issue is, it reads pretty much like “di-worse-ifying”.
But read for yourself, before I go on.
Pandora is positioned as a maker of “accessible jewelry”.
In other words between crap and over-priced luxury.
Personally, I do not like such “sandwich strategies” as these companies usually combine the worst of both worlds — weak pricing power to the upside and a lack of cost efficiencies to the downside to win on costs and volume.
When everything is fine, this can work as it has in the case of Pandora.
But in a downswing it can get ugly.
My view is the strategic shift is ignited by significantly higher silver prices and purely about cutting costs aggressively due to not enough pricing power, while selling the switch as a big evolution. Instead of full silver, the new offerings will have platinum platings. Whether one prefers platinum or silver is debatable. But what’s inside, the majority of the item’s material, will be of non-precious metals.
At will, they will be able to switch what’s inside for what’s currently the cheapest metal. People won’t notice anyhow, as it is not visible, while the marketing focusses on the plating. And platings can be made thinner.
Platinum has woken up from its two-decade long lethargy, but it has not risen as aggressively as silver.
I was honestly surprised that already 25% of sold items are of these new platings.
What I cannot tell is whether consumers just don’t care, don’t notice, or whether Pandora has been selling at cheaper prices. The start has been strong, that’s fair to say.
However, what might have been understood as a slow evolution or just as an add-on to the core, still circling around silver, unfortunately is not the game plan.
I am not a jewelry expert, and I cannot rate consumers’ tastes.
But using a healthy dose of skepticism, together with some common sense and my gut as my second brain, what Pandora describes as “that protects the brand’s DNA” in my view is a huge gamble and a not-to-be-underestimated risk factor.
Plated items are of lower quality than ones with full precious-metal content, especially when it is not a mix of say gold and silver or silver and platinum, i.e. staying within the precious metals group.
People who care about quality will view this shift negatively.
The following paragraphs explain it.
I guess I marked a bit too much, or could have even marked the entire text… Anyway, it becomes clear it is about cost pressure for them, not offering customers higher quality or more to choose from.
The consequence is this transition will create a huge whole into the bottom line next year when the silver hedges expire, while the platinum platings replace silver items. Operating margins will drop from the low 20s to 12% — assuming no additional headwinds from budget-strapped customers that already caused a noticeable growth slowdown.
To wrap it up until here, we have a case with growth concerns due to weak consumer spending — the company said so — and, more important, a risky strategic shift that in the worst case could destroy the brand, if the perception swifts to cost-cutters and “cheap”.
Maybe this is all priced in?
Pandora has a market cap of currently a smidgen below 40 billion DKK. Adding net debt of 10 billion DKK, we have an enterprise value of anlmost exactly 50 billion DKK. Free cash flow recently was 5 billion DKK after leasing costs are subtracted.
Makes an EV / FCF of 10x.
Not expensive, but also not extremely low and lucrative.
In my view, only the growth slowdown has been priced in. 10x is perfect a company that does not grow.
But the strategic shift and next year’s significantly lower margins will also pull down FCF, maybe halving it, as Pandora is simultaneously expanding its production facilities into Vietnam.
Buybacks were already paused.
I am less concerned about the debt — mainly two bonds expiring in 2028 and 2030, plus an undrawn credit facility. Nonetheless, leverage will rise next year strongly, given lower margins, and depending whether sales start to fall. This adds another risk factor.
With this assessment, I might be too pessimistic. All in all, the risks prevail in my view, as it is more than just a cyclical down swing this time.
I also noticed that Pandora never reached their record-high market cap from 2016, not even in 2025, when shares were at an all-time high. Buybacks masked this well. Just as a side note, but it tells me the market does not believe in this story long-term.
Which doesn’t mean that it could not be a great investment at some point.
But not now, given the discussed risk profile. 10x EV / FCF, based on last year’s numbers, is not cheap enough for me. Price to sales multiples look cheap, but I cannot rule out falling sales, falling margins, and PR issues with the new strategy.
Pandora today is a different company than during the last bottoms.
Conclusion
Pandora’s recent 60% drawdown looks like a classic bottom.
This time, however, it is not just a downswing as usual — Pandora undergoes a massive strategic shift.
With new risks and a valuation that doesn’t reflect that, I pass on this one.
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