Michael Jordan has six NBA championship rings. He also likes watches.
The five-time NBA most valuable player, who now owns the Charlotte Hornets, joined a list of athletes to invest in WatchBox, a site that allows people to buy, sell, and trade luxury watches. Brands include Richard Mille, a favorite of NBA players.
WatchBox said on Tuesday that it raised $165 million in its latest financing round. Joining Jordan were Milwaukee Bucks star and reigning championship MVP Giannis Antetokounmpo, Bucks owner Marc Lasry, Phoenix Suns stars Chris Paul and Devin Booker, and Wall Street investor Bill Ackman, among others.
WatchBox, based outside of Philadelphia, has reeled in $260 million since its founding in 2017. While the company did not disclose its latest valuation, people with knowledge of the matter told CNBC that it’s approaching $1 billion. The individuals asked not to be named because the valuation is private.
In an interview with CNBC on Monday, WatchBox CEO Justin Reis said the company is on pace for $300 million in net revenue this year, and could seek an IPO in the future.
WatchBox has an inventory valued at $150 million. Rather than serving as a marketplace for peer-to-peer transactions, the company buys and trades luxury watches from sellers. It then authenticates the products and resells them to collectors and other buyers, capturing transaction fees in the process.
“It’s no different than dealing with Goldman Sachs,” Reis said of the platform. “We have client advisors that you speak to and also manage your portfolio of watches.”
Luxury watches in high demand
The secondary luxury watch market is booming as top makers like Rolex and Richard Mille avoid increasing supply to protect scarcity around collections. That allows luxury lines to hold their value in the secondary market, especially as demand inflates.
Morgan Stanley reported Rolex sold 810,000 watches last year, while Patek sold 53,000. Audemars sold 40,000 watches, and Richard Mille sold only 4,300.
Consulting firm McKinsey estimates that pre-owned watch sales hit $18 billion in 2019 and could soar to $32 billion by 2025. According to the firm, pre-owned watch sales will be about half the size of the market for new retail watches by 2025, up from about one-third today.
WatchBox isn’t alone in trying to capitalize on the demand. Rivals like Watchfinder, Watchmaster, and New York-based Hodinkee are also expanding for positioning in the secondary market.
Hodinkee raised $40 million in December from investors including NFL quarterback Tom Brady. The company launched its pre-owned watch shop in October to buy and sell watches produced after 1990.
“In terms of size and scale, if you look at us in the market, we’re probably the largest platform in terms of revenue,” Reis said, adding WatchBox surpassed $1 billion in total revenue since its creation.
WatchBox plans to use the cash to expand its digital platform and open collector lounges in New York, Los Angeles, Miami, Houston and Dallas. International WatchBox locations include Dubai, Hong Kong and Switzerland, and Reis said the firm wants to reach 40 markets over the next three years.
