Pandora (PNDORA) just told investors it will keep replacing silver in its jewelry, even though silver’s price has fallen significantly from its record high.That decision surprised some market watchers. When the price of a material drops, most companies take the cost savings and move on. Pandora is doing the opposite.The Danish jeweler wants to stop letting one metal decide how its business performs. Silver made up the bulk of its products, and wild price swings kept dragging its results and its share price around.So its management is building a plan that holds up whether silver rises or falls. That plan, paired with a strong second-quarter report, pushed the stock sharply higher this week.Here is what Pandora is actually doing, why it matters for the share price, and where there is still risk for anyone holding the stock.Why Pandora is moving off silver even as prices fallSilver used to be the metal that determined the results of a Pandora quarter. It sat in most of the company’s products, so every price spike affected profit margins.That became a problem. Silver climbed past $120 an ounce in January before dropping back toward $65, CNBC reported. Pandora’s stock moved with it.More Retail Coverage:Big Lots struggles as new ownership keeps closing stores2 retail giants close 100s of stores and 1 faces bankruptcy riskCostco makes a pricing promise members need to knowCEO Berta de Pablos-Barbier wants that connection gone. She told Reuters the company has to separate its performance and share value from the commodity, adding that Pandora is a jewelry brand, not a silver trader.The fix is platinum plating. Pandora will move at least 50% of its relevant silver assortment to platinum-plated designs by 2027, and cut silver’s share of its lineup toward 20% over time.Platinum costs far more per ounce than silver, but Pandora uses only a thin plated layer, which keeps the finished product affordable.
Pandora plans to move at least half of its silver jewelry to platinum-plated designs by 2027.winhorse / Getty Images
How the platinum switch protects Pandora’s profit marginsThe whole point of the switch is steadier costs. When one metal determines your input bill, a price spike affects earnings and there is little you can do about it. By spreading across more materials, Pandora reduces how much any single metal can affect its earnings. That gives the company’s management clearer visibility into future costs.The plan is already in effect. Pandora launched platinum-plated bracelets in stores across Northern Europe and online, with a wider global launch planned for the second half of 2026, National Jeweler reported.There is also a demand argument. In a July study of23,000 shoppers, 78% recognized platinum as a precious metal, compared with 69% for sterling silver.Pandora says platinum-plated pieces will cost about the same as its silver jewelry.What the strong second quarter changed for the stockThe material plan landed alongside a second-quarter report that beat expectations and gave investors a reason to buy.Pandora posted 3% organic growth and raised its full-year outlook, according to a press release. Related: Dollar General copies Costco with a discount twistNet income reached DKK 875 million, well above the DKK 640 million analysts expected, Newsquawk reported.Management now expects 0% to 3% organic growth for 2026, up from the prior range of -1% to 2%. It also lifted its full-year EBIT margin target to a range of 22% to 23%, from 21% to 22%.The higher margin target is not purely operational. Pandora said it reflects a one-time gain from a U.S. tariff refund, according to a press release. Strip that out, and the underlying beat was closer to 3%, Investing.com reported.How Pandora locked in its silver costs through next yearPandora did not stop at the product switch. It also locked in the price on nearly all of its remaining 2027 silver needs.The company has now secured contracts covering 90% to 100% of its 2027 silver supply at about $65 an ounce, Investing.com noted. Its prior planning assumed roughly $82 an ounce.That lower locked-in price adds about 200 basis points to Pandora’s earlier 2027 margin assumptions. In plain terms, a lower fixed silver price means more profit falls through next year.This is the part that aligns with the platinum plan. One move cuts long-term reliance on silver, and the other controls the cost of the silver Pandora still uses in the meantime.What Pandora is doing with dividends and buybacksCapital returns shifted too, and the direction tells you where its management’s cash is going.Pandora raised its ordinary dividend by 10% to DKK 22 per share, Yahoo Finance reported. That is a direct payout increase for shareholders.At the same time, it paused its share buyback program. The company said it will resume buybacks once the platinum transition has progressed further.For investors, the tradeoff is simple. You get a bigger dividend now, and buybacks return later once the mineral switch frees up working capital.Where the risk still sits for Pandora investorsThe stock reacted strongly to the earnings report and news of the silver shift. Shares jumped after the results, though they gave back about 1.8% in August 14 trading.Even so, there is a need for caution. Pandora trades at about 14 times forward earnings, according to Yahoo Finance, against modest single-digit growth. The stock also carries a Neutral analyst consensus, Investing.com reported.The bigger question is whether shoppers accept platinum-plated pieces over the sterling silver they know. The U.S. accounts for about a third of Pandora’s sales, and consumer sentiment there is weak, de Pablos-Barbier told CNBC.If shoppers do not warm to the new platinum-plated pieces during the holiday season, Pandora could be stuck with unsold inventory. It would likely need to cut prices to move that stock, and that would eat into profit. That is the real risk for anyone holding the stock right now.Three things that must go right for the platinum planShoppers buy platinum-plated pieces at similar rates to silver, especially in the U.S. and Europe.The global rollout in late 2026 lands without supply or pricing problems.Organic growth stays inside the new 0% to 3% guidance range till the end of the year.Pandora has made its choice clear. It would rather control its own cost structure than wait for silver to behave.Related: Iconic supermarket chain closes more stores and facilities