Tiffany & Co., Christian Dior, Fendi, Givenchy, Marc Jacobs, Stella McCartney, Loro Piana, Kenzo, Celine, Sephora, and Bulgari. What do you think they have in common? The answer is obvious (even a child knows) – they all sell luxury. What a child may not know is that all these brands belong to LVMH, a French multinational holding and conglomerate, which experienced a 5% decrease in its value on Tuesday, May 23.
The good news is that despite the fact that Bernard Arnault lost $11bn in one day, he is still richer than Tesla CEO Elon Musk. These two have been swapping places at the top of the billionaire rankings for months. This is where the good news ends.
This is the biggest drop the company has seen in over a year, caused by concerns that the slackening US economy will cool demand for luxury goods. The current state of things will most likely lead to LVMH experiencing a slump in sales as well-off Americans and Europeans would rather slash their budget on fancies, while Joe Biden and the Congress are trying to find common ground. And while the entire world is anticipating news from the US, traders are actively following the economic calendar to stay informed about the latest economic affairs.
The fear of recession hit the entire European luxury sector, erasing about $30 billion from the industry. As for LVMH, it is the first company in Europe ever to attain a market value of $500 billion or half a trillion, which occupies a special place on European stock exchanges and in the hearts of investors.
Since the beginning of the year, shares in the Paris-based company have risen by as much as 20%. The 5% dip in the share price definitely left an unpleasant mark, but even after that, the company's valuation is more than $400 billion. What can we say – living in style is not forbidden.
The 12-month price forecast for LVMH Moet Hennessy Louis Vuitton SE is a 17.23% increase. But as the saying goes, not all that glitters is gold. We don’t mean to discourage you, we just want to remind you that conducting a thorough analysis remains crucial for executing a truly successful trade. This is rule #1 that every investor should stick to.
