Mene: Disruptive 24 Karat Gold Jewelry Business

EXECUTIVE SUMMARY

RESEARCH_Mene.pdf

Download PDF • 347KB

Investment Thesis

• Mene is an online 24 karat gold jewelry brand. There are no other Western jewelry players that focus on 24 karat bullion grade gold jewelry. There are some smaller, privately owned gold jewelry players in the West but they focus on lower quality 14 karat grade segment. Tiffany and the large diamond players offer higher 18 karat grade gold jewelry but with 80% markups. Mene inverts the customer value proposition with a 20% transparent markup model, offering 80% gold value to its customers. Apart from one time sales, the company also offers customers the option to sell back Mene jewelry back to the company for a fee, allowing it to act as an indirect gold broker with recurring revenues.

• The East has higher 22-24 karat gold jewelry players, but without reputational appeal to Western consumers. Because pure 24 karat bullion grade gold is soft and pliable, it is more fragile with more limits in design options. The high degree of craftsmanship required for 24 karat gold jewelry design and manufacturing creates significant barriers to entry. Given its superior design talent headed by Pablo Picasso's granddaughter and privileged access to gold supply through Gold Money, Mene has unique competitive advantages within the bullion grade gold jewelry segment. Most of its products are sold in the United States, Canada, Europe and Australia. The company is 64% owned by insiders, which greatly aligns shareholder interests to management.

• With only 2 years of sales history as a new startup, the company is institutionally neglected without any analyst coverage and is an undiscovered gem. Most investors are chasing fool’s gold seeking mining companies, despite its inferior business models characterized by high capital intensity and high degree of speculative risk in future mining operations.