Birkenstock’s IPO Might’ve Given Some Investors Cold Feet

Birkenstock’s IPO Might’ve Given Some Investors Cold Feet
Stéphane Renevier, CFA

5 months ago2 mins

What’s going on here?

Footwear brand Birkenstock’s initial public offering (IPO) got off on the wrong foot, with wary investors needing more than socks to warm up to the frozen market.

What does this mean?

According to the Barbie movie, Birkenstock sandals aren’t just a comfortable choice: they’re transformative tools that enlighten a wearer to “the truth about the universe”. So naturally, investors were expecting an awakening when Birkenstock debuted on the New York Stock Exchange. Well, looks like we’re not quite in sync with Barbie Land. Birkenstock’s shares landed at just over $40 at the end of day one, below their $46 IPO price. That’s the bumpiest first-day run for any $1 billion-plus US listing in the last two years. In fact, of the over 300 big-ticket US IPOs in the past century, only 13 have done worse. So despite being the third-biggest debut in the US this year, the listing did little to reassure investors about the struggling IPO market.

Birkenstock stock
Source: Google Finance

Why should I care?

For markets: It’s the sole that counts.

LVMH’s less-than-luxe results on Wednesday suggested that the high-end retail industry’s recent success is tailing off. And sure, chunky sandals aren’t exactly couture, but with collaborators including Dior and Valentino, Birkenstock has at least one toe in the luxury market. But the footwear firm has the other nine spread all over: the sandals’ diverse sporters are pretty evenly split across different generations, with the typical US wearer owning three pairs. And as a business, Birkenstock is consistently growing, supported by major backers, and makes a profit – rare for a newly public company.

Birkenstock revenue
Source: Statista

The bigger picture: Set a good example.

The IPO market has been stirring after a long slumber, with activity up just over a third versus the same time last year. Problem is, three-quarters of those newly listed companies are currently trading below their debut prices. If that tide doesn’t change, the dozens of private companies currently considering IPOs will be sure to twiddle their thumbs for a while longer.

IPO market
Source: Bloomberg


All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG