Birkenstock Stock Drops Further After Disappointing Wall Street Debut
Birkenstock’s Stock Plummets, Adding to Losses
Shares of Birkenstock, the German luxury sandal seller, experienced a 6% drop on Thursday, exacerbating their decline following a lackluster Wall Street debut. The stock had stumbled over 12% on its first day, falling from the initial public offering (IPO) price of $46. Despite raising $1.48 billion, Birkenstock’s IPO fell short of the $49 per share target.
Underwhelming U.S. Market Debut
Trading at approximately $37.79 on Thursday, Birkenstock’s stock has now plummeted 18% from its IPO price. This second-day drop was more significant than the broader Wall Street sell-off, which saw a decline of only about 1%. The lackluster performance of Birkenstock’s U.S. market debut follows weak showings from other companies, such as Arm Holdings and Instacart, after their recent IPOs.
Disappointing Performances from Arm Holdings and Instacart
Arm Holdings, a chip designer, slumped 5.2% to $51.70 on Thursday, slightly above its $51 IPO price from September 13. Instacart, the grocery delivery platform formerly known as Maplebear, was down 1.7% at $24.52, well below its $30 IPO price from September 18. These lackluster performances have dashed investors’ hopes of a resurgence in public listings after subdued demand for IPOs in recent years.
Market Capitalization and Acquisition
Birkenstock’s market capitalization currently stands at around $7 billion, or nearly $8 billion on a fully diluted basis. This valuation is nearly double the $4.35 billion that U.S. private equity firm L Catterton paid to acquire a majority stake in the company earlier this year. L Catterton is backed by French billionaire Bernard Arnault and his luxury goods empire, Louis Vuitton Moet Hennessy.
Influence of LVMH’s Shares
Birkenstock’s listing on Wednesday coincided with a sharp decline in the shares of luxury brand LVMH, following slower sales growth in the third quarter. According to Javier Gonzalez Lastra, Investment Partner at Tema ETFs, the timing of Birkenstock’s IPO was unfortunate as it followed LVMH’s results, which highlighted a significant deterioration in European consumers’ spending.
Despite the disappointing performance of Birkenstock’s stock, investors remain optimistic about the future. The company’s strong brand presence and loyal customer base provide a solid foundation for potential growth in the long run.
