From humble beginnings of two Indiegogo campaigns, to now one of the biggest watchmakers in the world, MVMT Watches is joining the Movado ($MOV) family. The purchase announced on 8/15/18 gives light into the affordable, mid-range watch segment so cluttered with cheap knock-offs, that a brand like MVMT stands out.
Starting with a mere $5,000 crowdfunding campaign, and launching in June of 2013, the two founders went on to raise over $290,000, and became the second most funded fashion campaign. Fast forward to 2016, and now they’ve sold 600,000 watches in 160 countries, with 1.8 million likes on Facebook, and 900,000 followers on Instagram. Jump ahead now to 2018, and as of this writing, they have 3.6 million Facebook fans, and crossed the 1 million followers on Instagram.
MVMT is a good buy for Movado
With prices ranging from $500 all the way up to $2,500, Movado is solidly in the middle / upper class of watches. The similar style, consistent branding, and minimalist style are all hallmarks of both MVMT and Movado, although MVMT clocks in much more affordable.
Consider the $100 million purchase price and possible additional $100 million in secondary tierd payments, and Movado is making a solid entry play. By finding and “vetting” customers in an entry level product, it gets them into the Movado family, and makes it easier to remarket to them and put the lifetime value of a customer up considerably. Now, you have millenials who are entering the workforce, looking for a stylish watch at an affordable price, and as they progress within their career, it would be easy to move them to a $500, $1,000, or $1,500 watch.
Growth within Movado
Looking at a straight equity play, Movado has a $57.86 price target when we look at it from a 5 YR EBITDA Discounted Cash Flow standpoint. That price target represents a modest 15% upside, but keep in mind, this doesn’t take into account the MVMT purchase and how it might change the dynamics. Price targets could be as high as $60-$65, if the MVMT purchase pans out the way everyone is hoping.
Interestingly enough, $MOV also pays out a small dividend, roughly 1.6%, or $0.80 a share. Sales show strong growth of 28%, while earnings per share show incredible growth quarter over quarter, with a 292% increase. They have also done fantastic this year, with year-to-date performance putting a 55% growth rate, and sales show strong growth at 28%.
Might be time to put $MOV into a diversified portfolio.