Last week, Patek Philippe announced that the legendary 5711 model is being discontinued. The watch has a legendarily long waiting list – supposedly around 10 years, reports Hodinkee – and is probably the most sought-after model in the world. The stainless steel Nautilus was a major winner in the battle against formal wardrobes, and the reference 5711, dark blue dial and no fuss, was the model’s platonic ideal. Before the news broke, the pieces were already selling well above their retail price of $ 33,710, and it’s not surprising that prices have continued to rise as they only become rarer after production downtime.
In 2020, the price of the Nautilus on the massive secondary location Chrono24 for watches was around 60,000 euros (around 72,679 US dollars). According to the website’s date, prices for the Nautilus rose 25% on January 22nd when rumors of a hiring first surfaced and another 31% on January 25th when the news was officially revealed. They are currently selling 49% more than 2020. Jacek Kozubek, founder of Tropical Watch, says he bought 5711 for $ 60,000 a few weeks ago and is now selling it for $ 80,000. Paul Altieri, the CEO of Bob’s Watches, says he saw prices go up 50%. “Crazy? Yes,” says Altieri.
The 5711 price boom is hardly shocking, but it is surprising to find out who exactly is driving those numbers up. When I asked Kozubeck whether the demand for the pieces had increased, he sent an e-mail back: “Not yet. Just a lot of people are trying to sell them :). “The skyrocketing prices seem to have less to do with the actual customers asking for them than with the popular belief among sellers that prices will eventually go up. “Much like other markets and asset classes lately, speculation seems to be making up a large part of the demand for the 5711,” said Max Abbott, co-founder of Beverly Hills-based watch store The Keystone.
“The craze is the modern version of the 17th century tulip craze,” explains John Reardon, owner of Collectability, a website that specializes in selling Patek Philippe watches. The tulip craze for those who take a crash course in Economy 101 this week is a cautionary story that centers around the flower trade in the Netherlands in 1636. Our Dutch ancestors valued tulips, but because of the long flowering time, growers agreed to sell the flowers before they even sprouted. Some began buying pieces of flowers to resell – reflecting today’s futures market – and push prices down to unsustainable levels. When a light bulb auction failed to attract customers in early 1637, the market completely collapsed. Reardon is referring to the first recorded market bubble and potentially devastating crash to describe what is happening in the currently booming 5711 market.
The run of these watches will only see more of these pieces hit the market, according to Kozubeck, which means some overzealous 5711 investors will take a bath. “Prices will go up, but when owners who had these and paid for them in the 30s see that they are listed for the 100K range, a lot more will come out, he says. “I think the price will be around 75,000.”
What we are seeing is a tiny, hype-based economy rising and falling right before our very eyes. The 5711 was flawless, but always a watch that was mainly driven by the hype, even according to its own manufacturer’s assessment. “At Patek Philippe we make around 140 different models. 5711 in steel is just one of them, “said Patek’s President Thierry Stern in 2019.” We have many other models that are more complicated and arguably more beautiful. “Scarcity was already an important part of the 5711’s resale price – and now the value of that approach is being tested. People like Reardon and Abbott argue that there are pateks made of finer materials, with chronographs or perpetual calendars – in other words, watches with higher inherent values. The 5711 is so hot now because it’s so limited, not because it’s valuable in itself – no unlike, say, Gamestop stocks. “We live in a world where common sense is challenged by social media and people’s values are based on being told what they can’t have,” says Reardon.
After a week of amateur redditors wreaking havoc on the stock market by betting on their favorite brands in past malls, Abbott’s assessment of what is happening may be cleaner. Talk to anyone who sells watches for a living and they will tell you to buy the watch you really love – as long as you do, the investment side of things will work just fine. The problem with tulips in the Netherlands of the 1630s wasn’t that people who loved them couldn’t get enough – the market was doomed when people started buying them with the sole intention of getting them at a later date Time to cash out. Dealers who buy the 5711 now will be in trouble if they overestimated how much people really love this watch. “When you try to be an amateur day-time watch dealer,” says Abbott, “the result is seldom long-term success.”