Zug, 11.10.2021

Chronext cancels stock market launch

On Friday, the Zug watch dealer Chronext should have gone public. That didn't happen, however, and the company is now silent about it. The reasons for the withdrawal are manifold.

What Fielmann is today for glasses, Chronext should one day become for luxury watches. That’s how Philipp Man, co-founder and CEO of the Zug-based company, summed up his ambitions a few weeks ago. What had been rumoured in the industry had already been known for some time: The online retailer for new and used watches, founded in 2013, wanted to become listed on the Swiss stock exchange, and soon.

On Friday, Chronext should have finally made its debut on SIX. The company wanted to raise between CHF 150 and CHF 230 million with the IPO (Initial Public Offering), and thereby finance further growth (we reported last week). This did not happen, however. On Wednesday, Chronext unceremoniously cancelled the IPO, two days before the official date. The signs that the IPO would not be a walk in the park had already grown in the run-up. Investment banks doubted whether the Zug-based company would be able to maintain the price range of CHF 16 to CHF 21 per share, which had already been lowered in advance. According to insiders, the order book had been largely empty at the beginning of this week.

Under the current conditions, it was apparently more difficult than expected to find investors for the watch trading platform. In the face of the threat of inflation and the possible tighter monetary policy, nervousness among investors has risen recently– which is reflected in the recent correction in the stock markets.

The online trade with new and used luxury watches is booming. The Zug-based company Chronext also wants to benefit from this.
Image: PD

The reasons for the withdrawal are manifold
The company justified the withdrawal on Wednesday with the "currently unfavourable market conditions for growth companies". It is, however, still determined to carry out an IPO "as soon as market conditions stabilise". Since then, Chronext has remained silent. In response to repeated requests, the management did not want to comment further on the situation. The disappointment seems to be deep- seated. No great reproach can be made of those responsible, apart from having sought to open up to the public too early.

Since its inception, Chronext has seen annual revenue growth of 104%. And while the watch industry as a whole recorded sales losses of 25 to 30% in 2020 due to the pandemic, Chronext grew by 18% and broke the CHF 100 million mark for the first time in the company's history.

The fact that the company has never been profitable can be attributed to the fact that profits are always reinvested in further growth, as growth prospects are excellent in the medium to long term. The online trade with new and used luxury watches is booming. Younger, digitally savvy generations are moving up as potential customers. This plays directly into the cards of Chronext and competing online platforms, such as Chrono 24 or Watchbox.

"In the long term, the business model could work," believes Timo Dainese of the asset management company Zugerberg Finanz. In the case of Chronext, however, the timing for an IPO was very bad. On the one hand, this is due to the currently bad mood on the watch market, which is reflected in the falling share prices of Swatch and Richemont. And on the other hand due to the company's ideas: "It was already sporty to want to raise twice as much capital with a turnover of CHF 100 million." In addition, competing offers such as that of Chrono 24 are now more profitable.