Birkenstock’s stock closed more than 12% below its IPO price on Wednesday, indicating investor caution towards new listings. The German sandal maker’s shares started trading at $41, lower than the IPO price of $46. The stock closed at $40.20, down 12.61%. This decline marks the worst debut by a company worth over $1 billion in almost two years.
The weak performance of Birkenstock’s stock follows the lackluster market debuts of other high-profile companies like Arm Holdings, Instacart, and Klaviyo. These companies have also experienced falling share prices since their listings, suggesting weak investor demand.
Thomas Hayes, chairman at Great Hill Capital, commented on the situation, stating that the valuations of these companies make no sense, especially in a down market with other bargain opportunities available. He believes that after the initial pop, the stock prices will drop.
Despite the disappointing debut, Birkenstock still has a market capitalization of over $8 billion. This is double the amount that L Catterton, the U.S. private equity firm backed by Bernard Arnault and Louis Vuitton Moet Hennessy, paid to acquire a majority stake in the company in 2021. L Catterton will continue to own nearly 83% of Birkenstock following its market debut.
Birkenstock, founded in 1774, has partnership deals with luxury fashion brands and has seen a 21% increase in revenue for the nine-month period ended June 30. However, its net profit for the same period fell 20% to 103.3 million euros.
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