When Swatch launched the MoonSwatch together with Omega a few years ago, the impact was remarkable: queues outside stores, viral hype on social media, and a brand that suddenly found itself back at the centre of pop culture. Now, the Swiss watch group is attempting to repeat that success - this time with an even more prestigious label. With its announced collaboration with Audemars Piguet, internally referred to as “Royal Pop”, Swatch is aiming for nothing less than the next global bestseller. The timepiece is set to be unveiled on 16 May. Ahead of the launch, the market is already speculating about a reinterpretation of the iconic Royal Oak, a model that enjoys cult status in the luxury watch industry. Should the move succeed, it could once again provide the Swatch brand with a substantial boost in revenue. Analysts believe additional sales in the region of CHF 200 million are possible. The market has already priced in part of this optimism. Swatch shares surged following news of the collaboration and even reached a fresh yearly high.
This is precisely where the investment story becomes more ambiguous. Although Swatch remains one of the dominant players in the global watch industry, structural challenges persist. Following a weaker 2025, marked by subdued demand and particularly weak developments in China, profitability remains well below previous levels. Operating margins have come under noticeable pressure, while earnings also declined sharply at times. Although the company succeeded in stabilising costs and maintaining its operational structure, the recovery has so far been slow. Particularly relevant is the declining share of the China business - from 27% to 23% - while momentum in other regions, especially overseas markets, is increasing. For 2026, management remains cautiously optimistic. Chairwoman Nayla Hayek has described the outlook as “realistic, yet confident”, while simultaneously highlighting ongoing political and economic uncertainties. The strategy remains clear: Swatch continues to focus on continuity, maintains production in Switzerland, and positions itself for a potential recovery in demand - particularly within the luxury segment. Another element of uncertainty concerns governance. Ahead of yesterday’s annual general meeting, an activist investor caused unrest and fuelled speculation about possible strategic adjustments. However, a fundamental strategic shift under the control of the Hayek family is still considered unlikely.
The key issue surrounding Swatch shares is therefore evident: if the new collaboration fails to replicate the success of the MoonSwatch, or if the widely anticipated strategic shift fails to materialise, the stock could quickly lose momentum again. On the other hand, if another global hype cycle emerges, the group still possesses the potential to redefine its brand identity - and thereby justify the recent share price rally. Swatch therefore exemplifies a classic stock market situation: a compelling narrative meets an already ambitious valuation. In the short term, news flow surrounding the new collaboration and activist investors is likely to generate volatility. Over the medium to long term, however, operational execution alone will determine success.
The new Barrier Reverse Convertible has been designed to generate an attractive return even during a period of share price consolidation. With a maximum maturity of 18 months, the BRC on Swatch offers a coupon of 8.60% p.a. To achieve this maximum return, the Swiss stock may even decline moderately. The key condition is that the underlying share does not touch the barrier set at 64% of the initial level. In addition, a soft-callable feature within the structure may lead to early redemption of the product - at the earliest after six months.
Alternatively, more speculative investors could consider both long and short positioning strategies if market momentum accelerates in one direction or if the share price reverses course. Overall, Leonteq currently offers a wide range of leverage products. These include warrants, knock-out warrants, and mini futures, all designed to transform both upward and downward market movements into disproportionately large gains.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.