Menē Inc. (TSXV:MENE) is transforming jewelry into an alternative investment asset class
SmallCapPower | November 23, 2018: Menē Inc. (TSXV:MENE) is a unique artistic jewelry designer that manufactures pure 24 karat gold and platinum investment grade ornaments that are transparently sold by gram weight. The Company sells directly to consumers in 90 countries through its website mene.com, where customers are provided with multiple options, either to buy, sell, or exchange Menē jewelry. Through Mene.com, customers can buy jewelry, monitor the value of their collection over time, and sell or exchange their pieces by gram weight at the prevailing market prices for gold and platinum.
Menē Inc’s name was inspired by mĕnē, an ancient Mesopotamian unit of weight for gold or silver and one of the earliest written words for money.
The jewelry sector faces many tailwinds, such as rising disposable income, an increase in the number of working-class women, growing women self-purchase practices and rising Internet penetration. With the advent of Internet, consumers find it increasingly easy to identify the value of jewels they are purchasing, eliminating the asymmetric information that had affected the industry for a long time. Jewelry retailers are also finding it easier and cost effective to sell online, as it eliminates the cost of opening fancy retail outlets. Though the shift to online jewelry shopping has been modest, industry leaders such as Menē would certainly benefit from the transparency they offer.
Even though the jewelry industry faces a lot of competition, Menē’s emphasis on providing pure 24 karat gold and platinum timeless pieces sets it apart. Additionally, Menē focuses on creating daily wearable pieces, such as charms, chains, bands, pendants, rings and bracelets.
Investment Thesis
- Disrupting the traditional jewelry market
- Redefining jewelry into an alternative investment class
- Backed by prominent investors
Disrupting of the traditional jewelry market
Traditionally, the jewelry industry is affected by a lot of asymmetric information like the making (design & manufacturing) charges, purity of gold/platinum/silver, consumer unawareness, etc. Menē is looking to change this by providing transparency as well as an attractive exchange policy on their online platform. The Company provides price transparency by charging consumers gold and platinum weight value plus an additional ~20% fee for design/manufacturing charges. For example: a Menē ring that costs $1,000, will have about $800 worth of gold or platinum value at the time of purchase and $200 is the design/manufacturing premium. Menē provides a lifetime guarantee to buy-back or exchange any authentic Menē jewelry at the prevailing gold and platinum prices minus a 10% fee.
Redefining jewelry into an alternative investment class
Menē jewelry is crafted using 24 karat gold and platinum with no diamonds or gemstones, meaning the ornaments can be used/stored timelessly, eliminating the possibility of being tarnished unlike counterpart ornaments that are made using chemical alloys: 14-18 karats (58%-75% pure). In order to produce 24 karat pure gold/platinum products, the Company has stayed away from using diamonds/gemstones, rose gold and white gold, which require dilution with copper or nickel. Diamonds and gemstones depreciate in value and chemical alloys tarnish due to oxidization, rendering the value of such pieces lower than market value over time.
Menē has established itself as a vertically-integrated Company, engaging in end-to-end activities ranging from design, manufacturing, fulfillment, customer service, marketing, and software engineering in-house. The Company manufacturers its pieces in-house locally in Paris and New York and the initial collection comprises of over 2,000 SKUs, consisting of charms, chains, rings, bracelets, and pendants. Since January 2018, Menē has sold over 11,000 unique pieces of jewelry to customers in 53 countries and reported a high costumer repeat rate of ~27%.
Backed by prominent investors
Menē Inc. is backed by Goldmoney Inc. (TSX:XAU), a global leader in precious metal investment services, Bitcoin custody and the world’s largest precious metals payment network. XAU owns a ~38% stake in Menē. In December 2017, the Company raised a Series A Financing from leading global investors such as Goldmoney Inc., Wellington Management, U.S. Global Funds and other prominent institutional investors, providing ample capital for expansion. Menē has a strong balance sheet with low debt, which will enable it to better pursue growth opportunities.
Menē Inc’s founders include Diana Picasso, noted art curator and granddaughter of the late artist Pablo Picasso, as well as international Supermodel and face of Saint Laurent Anja Rubik.
Valuation
Since its launch in January 2018, Menē has become one of the world’s most successful jewelry brands with order growth of more than 300% in three quarters. The Company has generated $8 million in revenue entirely online since January 6, 2018 and seems to be on its way to changing consumer’s perception towards jewelry from a discretionary item to an alternative investable asset. The brand has gained traction from prominent publications such as Vogue and the New York Times. Menē stock trades at a market capitalization of C$91.2 million.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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