Laopu Gold Co., a prominent Chinese luxury jeweler, saw its market value plummet by $2.1 billion. This sharp decline followed the company's projection of first-half 2026 revenue growth between 60% and 66%, reaching 20.5 billion yuan. While seemingly positive, this outlook disappointed investors who had higher expectations for the company's performance, leading to a nearly 24% slide in its Hong Kong-listed shares to HK$302.20 ($38.5).
The company, often dubbed the "Hermes of gold jewelers," has been grappling with several challenges, including slowing sales and a significant downturn in gold prices. Monthly sales in its physical stores reportedly decreased by mid-double digits year-on-year from March to May, according to data analyzed by Bloomberg News. This sales slump, coupled with a general selloff in the gold market, has fueled concerns about Laopu Gold losing its momentum.
Despite the recent downturn, some financial institutions remain optimistic about Laopu Gold's long-term prospects. JPMorgan Chase & Co., Nomura Holdings Inc., UBS Group AG, and China Securities Co. Ltd. are among those who argue that the market is undervaluing the company's strong brand and affluent customer base. JPMorgan, for instance, had set a mid-June target price of HK$1,296, partly anticipating gold prices to reach $6,000 per ounce by year-end. However, the actual gold price has retreated significantly, falling from an all-time high of $5,500 to $4,020 an ounce, impacting the valuations of luxury jewelers like Laopu Gold.
The company's stock has fallen nearly 70% from its all-time high, erasing approximately HK$120 billion ($15.3 billion) in market value. This decline highlights the vulnerability of premium jewelry brands to fluctuations in bullion prices, even those with strong luxury positioning. While Laopu Gold aims to differentiate itself through craftsmanship and brand rather than just gold weight, its significant inventory of 16 billion yuan by the end of last year, a nearly fourfold increase from 2024, makes it susceptible to falling gold prices, which can deter consumer purchases and pressure the company to liquidate its stockpile.
