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I hold an immense amount of respect for Roy Sebag (the Executive Chairman of Mene and CEO Goldmoney). He speaks and acts with a deep understanding of how the world works. In addition, both companies that he's involved - Mene and Goldmoney - highly respect and value their customers. Mene, as an example, provides perfect transparency for how much the buyer is paying Mene. You will find very few companies that operate with as much respect for the customer as these companies. From a point of integrity with other businesses and customers, there are very few people who have the integrity of Roy Sebag. If you get a chance to meet him, I highly recommend doing so as you'll seldom meet people in business who value their customers like him.
Unfortunately, Mene as a company does an extremely poor job for shareholders. If you had owned Mene's stock and dollar cost averaged into it for the first few early years, you would have had an abysmal performance. One reason involves marketing. While the company has solid integrity for customers, the company misunderstands their market and has been everything but exceptional for shareholders.
Note that Yahoo Finance lists Mene jewelry stock data as dating back to 2014. Yet Mene was founded in 2017 and publicly listed in November 2018. Yahoo's data is suspect and I would be careful about using it as a tool to analyze Mene. My stock analysis here involved looking at Yahoo's listed price of Mene in November 6th, 2018 ($0.5721) that had volume listed and Mene's price at the time of this post being written ($0.11). Note that this post was published later than when I wrote it. If you use the exact date of November 1rst, 2018 from Yahoo Finance, the price of Mene would have been 0.0933 with no volume on that date.
What Is Mene Jewelry?
In a sentence, Mene jewelry sells 24 karat gold and platinum jewelry. To add a little detail, they are one of the few jewelry companies that tells the customer the exact weight of the metal a customer buys along with the exact amount of fee that the customer pays to Mene. For instance, at the time of this post, this is what Mene's site shares if you click the "i" icon by the Mene fee:
MENE PRICE TRANSPARENCY Mene transparently prices, sells, and buys-back our pure 24 karat jewelry by gram weight based on the official precious metal values. Our innovative technology allows customers to make well-informed decisions by understanding and tracking the value of their jewelry at the time of purchase or in the future. Weight The weight (measured in metric grams) represents the pure 24 karat gold or platinum content within each design.* Fluctuating Precious Metal Value Mene jewelry prices fluctuate based on the market price for gold and platinum.** Mene Fee The fee which Mene earns on each piece sold which is approximately 30% of the total value of each item. This fee includes all design, manufacturing, shipping, and insurance costs. * Weights can fluctuate by up to 0.5 Grams per each design. ** Our precious metal values are based on the international bullion markets for gold and platinum.
This is extremely rare to see from any jewelry merchant. For one, most jewelry is not 24 karat gold; in the West, it's usually 14 karat. You can find 24 or 22 karat gold in India or Dubai, but outside those two places, it becomes hard to find. In addition, you rarely know the weight of the total metal you're purchasing. If we look at a company Mene compares itself to (Pandora), they list products in a different way. If were dig into a Pandora product (in this case, a ring), under "Product Details" we see something fascinating:
Give a gift from the heart with this gorgeous openwork ring, the perfect way to express your love. Exquisitely crafted in sterling silver, this delicate style features a band of hand-finished hearts and delicate bead detailing. The romantic design looks equally beautiful worn on its own or layered with contrasting Pandora rings. Collection: Pandora Moments Stone: No stone Colour: No color Themes: Love Product Type: Rings Item: 190980 Metal: Sterling silver Material: No Other Material Dimensions: Depth: 1.3 mm, Height: 3.4 mm, Width: 3.3 mm
We have no idea the concentration of the metal, the amount or underlying value! Pandora is extremely vague about this product, though at the time that I looked, I received a pop-up that said it was very popular.
Look again at the description. What is it even saying? Look at all the nonsense in the description that means nothing:
Give a gift from the heart [the heart doesn't give gifts] with this gorgeous openwork [?] ring, the perfect way to express your love [actually, this depends on the person and is unlikely to ever be perfect]. Exquisitely crafted [according to whom?] in sterling silver, this delicate style features a band of hand-finished hearts [what does hand-finished actually mean here?] and delicate bead detailing [oooooh, but meaningless]. The romantic design [according to whom again?] looks equally beautiful worn on its own or layered with contrasting Pandora rings [CROSS-SELL gimick!].
While I poke fun here, Pandora does an exceptional job here. They show an excellent product description because good marketing is often fluff. That is A+ fluff. Plus their cross-sell is extremely brilliant because this will work well with some customers who want jewelry to look cute and match (their target demographic).
Why Am I Fascinated By Mene?
After several successful ventures and marketing campaigns that involved solving customer problems from 2012 to 2015, I decided to address the complaints I kept hearing about inaccurate media. In late 2016, a close friend and I started a media company. We differed from mainstream media because we only wrote what we understood and we expressed skepticism where we could tell incentives were misaligned. In a sentence, we were transparent. In early 2019, we closed our media company because we never made profit and we got little attention, even though we provided accurate information.
In fact, at one point I wrote an article cautioning traders and investors about a hyped crypto product ("Zcash") that was getting significant mainstream media attention because it used a supply shock in its beginning. I warned these investors and traders that the crypto product would crash. It did. In fact, the crypto product crashed over 99% in value (from over $5,000 at the time I wrote the article to $35 in less than a year). The reason I knew it was being hyped is that the mainstream media admitted that they had a financial incentive in the instrument doing well. They wrote glowing articles about the product. To this day, the hyped financial product has never come close to the $5,000+ price, nor has it been able to even rise above $1K, according to CMC.
(Cleverly the mainstream media removed their glowing intial articles about this hyped crypto product. That's good marketing. But it is the opposite of honesty and transparency. While people will complain about media who do this, they will continue to read and visit those sites. What is said? What is done? Note this.)
What my friend and I learned is that people say they value transparency in media, but do not act or reward this value. In other words people don't actually respect someone who's honest in their actions. In a sense, the crypto product successfully used marketing to hype their product and as I predicted, they would never see that high price again. People don't value and will never value the truth in their actions because the truth is both boring and involves reflection. There's no "urgency" or "rush" to truth. Likewise, there's no fantasy. One thing I learned in writing about financial topics on our site was that most people invest due to fantasy, not reality. People bought crypto products because it helped them imagine a fantasy life they would live. When the products crashed 99%, they moved onto the next fantasy they never achieved. No one wanted to actually know whether an idea had value or not. People will say the opposite, but this is not true.
When I contrasted this with some of my other product ideas that had worked, I realized that transparency is not a universal value. For an example, in the survivalist industry where I've done exceptionally well, people value and act on transparency. But energy drinks differ; my success with energy drinks was more about demographics and positioning with contrast marketing. Energy drink customers don't reward transparency, but they don't punish it either. You can be very transparent with your energy drink brand, but it won't add to your sales. By contrast, media customers punish transparent media. The more honest and accurate, the less likely you'll have readers.
When I originally heard about Mene, I recognized the business strategy: transparency as a marketing technique. Mene is attempting to do this in jewelry. Both jewelry and media have widespread dishonesty in the sense that jewelers don't want you to actually know the value of what you're buying. You'll seldom meet a jeweler who tells you the details of what you're buying. Mene is different. They tell you all the details. I've kept my eye on Mene because I theorize that the target demographic of jewelry doesn't actually value transparency regardless of what they say.
Believe What the Numbers Tell You
Mene has listed their IFRS adjusted revenue for as many years as I've been keeping my eye on them and the numbers paint the exact picture when we look at the first quarter of the year:
- IFRS adjusted revenue 2021: $7.2 million
- IFRS adjusted revenue 2022: $7.3 million
- IFRS adjusted revenue 2023: $7.1 million
- IFRS adjusted revenue 2024: $4.8 million
Because I heard about Mene around 2018, I had saved some old financial numbers from their old Non-IFRS numbers dating back to 2020:
- Non-IFRS Quarter 1, 2020: $5.6 million
- Non-IFRS Quarter 1, 2021: $8.3 million
- Non-IFRS Quarter 1, 2022: $9.3 million
I choose the quarter where we could compare numbers this year. It's worth noting that per Mene's latest data along with data I've collected on them, quarter 1 is generally their 2nd best quarter of the year (behind quarter 4).
One important point to note is that because Mene sells 24 karat gold and jewelry, we can also evaluate these numbers with the performance of the metals themselves. We may expect that as gold or platinum rises, we'd see some fall in the amount of demand, as the jewelry by weight is more expensive. How would the price be affected? That depends on how we look at the overall picture. What we do know in looking at this first quarter, is that gold has risen in price and the actual dollar amount of jewelry dropped from $7.1 million (1rst quarter 2023) to $4.8 million (1rst quarter 2024). Note that the average price of gold in the first quarter of 2023 versus 2024 was $1,875 versus $1,920 and these numbers reflect the Western price.
I start with the numbers here because the numbers tell the exact story of what is going on with the company. These are terrible numbers. Comparing Mene with Pandora, Pandora is up over 3 multiples in the past 5 years and pays a dividend. Pandora is crushing Mene. Yet Pandora is far less transparent and more expensive when you make weight-by-weight and fee measurements. Why?
Target Demographic
The biggest miss with Mene involves demographics. First, Mene attempts to sell to the West. This is a big mistake, as the West values 24 karat jewelry far less than people in the East (India, Dubai, China). I've had conversations with people in the West about 24 karat jewelry that literally had pushback like, "24 karat gold is too weak for jewelry and I'd be willing to pay much more for 14 karat jewelry." They admit that they would pay more money for less gold because of "strength" - something that is less important with platinum rings. We could say that some of this is misunderstandings about 24 karat gold or platinum jewelry, as I've held a 24 karat gold ring and it held its weight. However the counterpoint here is that a person doesn't know this unless they can see and feel this. Pandora has physical locations. Mene does not. Mene is trying to sell jewelry that some of its possible customers might value, but without a physical presence, these customers can't feel test the product.
Second Mene misses with their biggest possible customer: females. Females are much more likely to wear jewelry than men and even with Millennial's low marriage rate, Millennial females have still purchased jewelry in large volumes. Unfortunately for Mene, they don't attract as many females as a company like Pandora. Compare how the product is marketed. Pandora makes the product feel special. Mene makes the product feel like it has value. Mene also makes the purchase feel logical whereas Pandora makes the purchase feel like an experience - this can be better done in a store too.
Third, Mene miscommunicates its product to its ideal demographic: it angles its jewelry as "investment" jewelry and you can track the performance of what you bought. This is what I call "stupid marketing" - this completely misunderstands jewelry buyers. You will never hear a jewelry buyer say, "God, I wish I had a dashboard to see the performance of my jewelry. I would just love to see a graph of how my jewelry has appreciated over time." It's laughably stupid because most of us know that jewelry buyers like how jewelry looks, not that it appreciates in value. For those unfamiliar with stupid marketing, this is when a company tries to solve a non-existent problem.
In reality, jewelry buyers value the jewelry arbitrarily whether the jewelry represents a memory, matches an outfit, looks cute, or physically declares that someone (or something) has value (like a proposal with an engagement ring). You can chuckle at what I wrote, but this represents the majority of jewelry buyers. None of these are measureable by any graph. Turning a jewelry purchase into a trackable investments diminishes the experience and comes off as very "surveillance-ish" which doesn't feel great. Mene's tracking of your jewelry performance comes off as borderline creepy. Because Mene sells 24 karat jewelry, it's possible that they have to comply with AML and KYC laws and this is exactly how the experience feels. But it significantly diminishes the product and experience.
Customers Do NOT Always Reward Transparency
Most customers do not reward transparency, even if they claim that they value it. When I showed my female friends Mene, they liked what they saw, yet none of them purchased their products (these specific women were regular buyers of jewlery from Pandora and other mainstream merchants). None of them could say why they wouldn't do business with Mene versus a company like Pandora, but when I compared a ring on Mene with a ring on Pandora, it became clearer why. Pandora spends their entire page for a product selling them on the product. Mene makes it "feel" like a value transaction, which feels very logical and business-oriented. It doesn't feel special at all; it feels logical. Are there people who buy jewelry for logical reasons? Yes, but as we see, this market spends far less money than the market which buys jewelry because it feels special.
People say many things, but you'll observe that they don't act on what they say. This is classic human behavior. Pandora versus Mene is a great example of this. Get into any logical conversation about jewelry and most people will tell you that most jewelry is overpriced. Show them a product that has fair value and is not overpriced relative to its peers. They will verbally like it. They will agree it has value. They will even tell you that they're thinking of buying the product. They later buy a Pandora product. Why? Because a person's values about jewelry are much more arbitrary than what they want to admit. I love to caution marketers: no one wants say "I'm completely illogical in my shopping" yet very few people are logical.
Are there times where customers reward transparency? Yes and jewelry is not one of them.
Status Symbols vs. Needed Products
When a customer needs a product, they can make an entirely different decision than when a product is a status symbol. A status symbol is not needed and is often about showing off. If a customer has a significant amount of money and can kill two birds with one stone (both a status symbol and a need), they'll do this.
My favorite example of this is brown eggs versus white eggs. An egg is an egg. In cost, a brown egg is twice as expensive as a white egg. An egg is not an egg to the person who wants to boast. This person will buy the brown egg over the white egg to show off. He'll even pretend that a brown egg tastes better, when you could blindfold him and run a test and he wouldn't know. Even though he sounds like a complete idiot as he boasts about his brown eggs, he consistently will act on this. The reason is because the brown egg represents his pretentiousness. He can buy a brown egg instead of a white egg. During 2020 when there was an egg shortage, these people all disappeared. Suddenly they were willing to buy white eggs! Why? Because the shortage of eggs exposed their fraud - they were only buying brown eggs to show off, but during a shortage, having ANY EGGS was the sign of status.
Notice though how these people spin their purchase of brown eggs. They verbally say reasons like "taste" or "healthier" yet as we see, this is not their actual value. You could run a taste test. You could even have scientists show that an egg is an egg. What we misunderstand here is that these people are not buying brown eggs for the reason they state. They are buying brown eggs because they want to be pretentious. They won't state this, as it would immediatley expose who they really are, so they have "reasons" that are nonsense.
Jewelry is a status symbol. Pandora's jewelry is part of a collection and is popular. Mene's jewelry has value behind the price that you can measure. This isn't quite the same as the egg analogy, as eggs are exactly the same except color whereas these jewelers have fundamentally different products. But people buying for status symbols want an "empty" product that shows off their status. They don't want a value product because that indicates need or analysis.
Smart people really struggle here and I empathize with them because it's counterintuitive. However, when you struggle to understand why, think of brown and white eggs. People literally pay twice the price for the exact same product because it allows them to pretend as if they're more sophisticated. Jewelry targets these people and this is why Mene misses.
Customer Value vs. Shareholder Value
Mene, like Goldmoney, serves its customers well. I respect that. Customers who want to do business with a company that values them will prefer Mene over Pandora. However, Pandora serves its shareholders much better than Mene. At the end of the day, serving customers doesn't always equate to strong performance for shareholders. Sometimes it does, but in this case, it does not.
Look at the marketing material for shareholders of Pandora versus Mene. Who is more transparent and upfront? Does Mene talk about how poor of a job they've done for their shareholders? No. This is fascinating because the way that Mene markets itself to its shareholders is different than how it markets its products to its customers. I challenge Mene to show the entire performance of its stock since inception on its marketing material to its shareholders. That would be transparent!
I came to a similar conclusion with the media site I co-founded. "People want to know what they want to know. That's why they read media." In other words, people aren't watching the news to learn. They're watching the news to be told they're right or to get excited about something, even if it's terrible. Once I realized that, I recognized that there will never be money in transparent and honest communication. This differs a bit from Mene here, in that they are transparent with their customer, but could improve their transparency with their shareholders.
Related: Goldmoney
Before I wrap up with my final thoughts, let's look at a company run by Roy Sebag, the co-founder of Mene. According to Yahoo and Google Finance, Goldmoney went public in May of 2015. Goldmoney has been a public company for almost ten years. How well has it done since it went public?
According to this shareholder letter )Goldmoney went public on May 13th, 2015. In looking at both Google and Yahoo finance, I could find this original data for two different securities - XAUMF (US OTC market) and XAU.TO (Toronto). Google Finance shows $22.32 was the original price for XAUMF. The price is much lower now according to Google Finance. Yahoo Finance shows the adjusted close price for XAU.TO of 13.19 on May 13th, 2015 (Yahoo Finance uses the adjusted close price account for splits/dividend changes). The latest XAU.TO adjusted close price at the time of this post is near $7. In other words, both Google and Yahoo Finance agree that Goldmoney has a lower price now than when it went public.
What we find throughout Goldmoney's materials to shareholders is marketing, marketing, marketing. I don't see much discussion about how poorly they've performed in the past 9 years, but maybe I missed it in their letter. I see this quite frequently with companies like this "We're building long term value." Guess what? Nine years IS LONG TERM and yet what does Goldmoney have to show for these 9 years? As of this writing, Mene seems to be a copy of this only with jewelry. They treat their customers well, but how do you think their shareholders feel? In a similar manner, they appear selectively transparent with their shareholders.
Final Thoughts
I like the jewelry industry - and as we see some jewelers have done well for shareholders. Mene is not one of these. While Mene has some smart leaders, they provide a good example of being too smart for their own good. They treat their customer well. But any long time shareholder will have a very different view of the company.
UPDATED. I've updated this post to note that anyone who considers Mene or any other related company should consider these points related to marketing. Being transparent with customers is good. I would suggest Mene do the same across the board with shareholders by highlighting Mene's full historic performance along with why they've struggled to generate results over time for shareholders. After a company performs as poorly as Mene over time, one way to rebuild trust is to regularly provide income to investors to show that you can generate profit. However, as some readers may understand, you cannot do this if you're actually an unprofitable enterprise. Ironically, I find companies that have elitist leaders who emphasize value ironic because they seldom acheive any value at all because they misunderstand basic human nature.
Also, consider this point on how transparent Mene is with shareholders: this site alleges that Mene has been diluting shares. Per TradingView for MENEF:
- In 2020 there were 244,290,000 shares
- In 2021 there were 253,940,000 shares
- In 2022 there were 258,630,000 shares
- In 2023 there were 259,770,000 shares
- Now there are 259,830,913 shares (now is based on this saved link)
This is something to keep an eye on, as I didn't see any transparency of this in Mene's recent presentation for investors. Is TradingView incorrect here, is this something that doesn't get highlighted on investor information, or is there something else happening?
