Birkenstock IPO Underwhelms As Shares Fall After NYSE Debut

The Birkenstock Holding Plc (NYSE: BIRK) stock price opened at $41 on Wednesday following its stock market debut on Tuesday, where its shares were priced at $46, right in the middle of the initial proposed range of $44 to $49.

The dismal performance of BIRK stock after its debut indicates that investors are still cautious about IPOs given the recent slew of US IPOs, including the Arm listing, Intacart’s IPO and Klaviyo’s IPO. There has been mixed performance among recent IPOs, with Arm and Instacart still trading above their IPO prices. 

Birkenstock raised $495 million in the offering and plans to use the proceeds to pay off loans. The company's stock concluded the trading day at $40.20 per share, a decrease from its initial trading price of $41, resulting in a market valuation of $7.55 billion. 

The Birkenstock family had operated the sandal maker for almost 250 years before selling a majority stake to L Catterton, which is majority-owned by LVMH founder Bernard Arnault. The IPO was long-awaited, with many questioning the high valuation placed on the firm. 

Birkenstock CEO Oliver Reichert explained: “The best thing for the brand would be staying family-owned, but within the family, there were so many problems, so we went for the second best option, and that’s to be public and give the brand back to the people.”

Since L Catterton acquired a majority stake in Birkenstock, the company has experienced impressive growth, nearly doubling its valuation. Over fiscal years 2020 to 2022, sales surged from 728 million euros ($771 million) to 1.24 billion euros.

In fiscal year 2022, Birkenstock reported a net income of approximately 187 million euros, achieving healthy margins of around 60%. The company still has room for margin expansion, particularly if it continues to grow its direct-to-consumer sales, which have risen from 18% of total sales in fiscal year 2018 to 38% in fiscal year 2022.

Birkenstock's initial public offering (IPO) arrives when the IPO market is gradually beginning to thaw after a period of stagnation lasting over a year. However, the IPO market remains turbulent and uncertain. 

Birkenstock stock price. 

The Birkenstock stock price was trading up 0.52% at $40.41 from Wednesday’s closing price of $40.20.