COPENHAGEN, Denmark — Shares of Pandora A/S, the world's largest jewelry maker by volume, plunged nearly 7% on Tuesday after analysts at Jefferies issued a stark warning about the company's vulnerability to fluctuating silver prices, downgrading its rating from Buy to Hold.
The downgrade came amid a broader market unease, with Pandora's stock dropping 6.7% in afternoon trading on the Copenhagen Stock Exchange. This followed two consecutive days of modest gains, but the shares have been under pressure all year, falling 46% throughout 2025 and down 26% year-to-date as of early February 2026. Investors appeared spooked by the analysts' assessment that the Danish company, known for its customizable charm bracelets, is squeezed between rising input costs and weakening consumer demand.
"The confluence of a more pressured consumer and heightened silver volatility mean the business is caught between a rock and a hard place," Jefferies analysts wrote in a research note released Tuesday. They highlighted silver's price swings as the primary culprit, noting that even recent sell-offs haven't erased the metal's elevated levels. Silver prices, which had surged as a safe-haven asset amid economic uncertainties, experienced their worst single-day drop since 1980 on Friday, triggered by President Donald Trump's announcement of Kevin Warsh as his nominee for Federal Reserve Chair. The move eased some fears about the central bank's independence, prompting a retreat from precious metals.
Despite the Friday sell-off, silver remains nearly three times higher than it was a year ago, according to Jefferies' analysis. This persistence in high prices could imply up to 60% lower profits for Pandora in 2027, based on the firm's modeling. The analysts slashed their price target for Pandora shares to 530 Danish kroner (about $84) from a previous 850 kroner, reflecting diminished expectations for recovery.
"The most pernicious problem will be a long-lasting hesitancy to engage in the name, given silver price moves," the Jefferies note continued. "This means that even if silver retrenches and the stock lifts on mechanical earnings momentum, investor engagement will be slow in returning." The firm expressed reluctance to recommend the stock actively, citing the "volatile input" of silver prices as a special situation that complicates forecasting.
Pandora's challenges aren't isolated to commodity prices. In January, the company trimmed its full-year earnings guidance, citing softening consumer sentiment particularly in the United States, which accounts for a significant portion of its sales. Jefferies pointed out that Pandora's core customers — lower-income consumers — are grappling with inflation and rising living costs in what economists have termed a "K-shaped economy," where high earners thrive while others lag behind.
To offset escalating silver costs, Pandora implemented price hikes of about 14% on its products. However, this strategy backfired, according to Jefferies, as it eroded consumer engagement and dampened sales momentum. The analysts dismissed quick fixes like switching to silver-plating or stainless steel alternatives, warning that such changes would introduce manufacturing complexities and potentially degrade the perceived quality of Pandora's offerings.
"We doubt a switch to silver-plating or stainless steel will act as a panacea given the added complexity of manufacturing and the potential deterioration of customer offer these imply," the note stated. This view underscores a broader concern among investors: Pandora's heavy reliance on silver, which makes up a key component in its affordable jewelry line, leaves it exposed in an era of commodity volatility.
Other analysts have echoed these worries. In January, Citi analysts downgraded Pandora to Neutral from a higher rating, attributing the move to slowing sales growth and rampant silver price inflation. "Near-term visibility has diminished considerably, worsened by a volatile macro environment in the US and Europe (~80% of sales) and potential brand and jewellery consumption fatigue," Citi said in its report. The U.S. and European markets represent the lion's share of Pandora's revenue, making regional economic headwinds particularly acute.
Pandora, founded in 1982 in Copenhagen, has built a global empire on the appeal of its sterling silver charms and bracelets, selling over 100 million pieces annually at one point. The company went public in 2010 and quickly became a darling of retail investors, but recent years have tested its resilience. The 2025 stock decline of 46% was exacerbated by post-pandemic shifts in consumer spending, with luxury and discretionary items like jewelry facing cutbacks amid inflation.
The silver price surge ties into larger geopolitical and economic narratives. Throughout 2025, investors flocked to precious metals as hedges against inflation and uncertainty surrounding U.S. monetary policy. Trump's re-election and his Fed nomination signaled potential shifts in interest rate strategies, which could further influence commodity markets. On Friday's sharp silver decline, prices fell more than 10% in a single session, the steepest drop since the 1980s, but analysts like those at Jefferies caution that the metal's baseline remains elevated.
"With silver now jumping around, we are reluctant to endorse an active recommendation subject to a special situation and volatile input," a Jefferies analyst remarked. "The challenges of the last few months will mean, even in a more normal silver price world, PNDORA will remain substantially cheaper than even a year ago." This pessimism contrasts with earlier optimism when Pandora was seen as a stable player in the luxury goods sector, but current conditions have flipped the script.
As Pandora prepares to release its full-year 2025 results on Thursday, all eyes will be on how management addresses these pressures. The company has not yet responded to requests for comment on the Jefferies downgrade, but executives previously acknowledged the silver cost issue in January's guidance update. Investors are bracing for potential further revisions, especially if U.S. consumer data continues to show strain.
Beyond immediate stock movements, the saga highlights vulnerabilities in global supply chains for consumer goods. Jewelry makers worldwide, from small artisans to giants like Pandora, are navigating similar commodity shocks, with silver's role in electronics and solar panels adding to demand pressures. In a broader context, the "K-shaped" recovery — where economic benefits accrue unevenly — poses risks to brands targeting middle- and lower-income demographics, potentially reshaping the retail landscape.
Looking ahead, analysts suggest that sustained high silver prices could force more strategic pivots at Pandora, such as diversifying materials or expanding into higher-margin segments. However, with earnings due imminently, the market's reaction could set the tone for the coming quarters. For now, the jeweler's fortunes remain tied to the unpredictable glint of silver markets and the wallets of its everyday customers.