Stock Market Debut Falls Short
Birkenstock’s highly anticipated stock market debut got off to a rocky start as its shares began trading significantly below expectations.
On Wednesday, the company’s stock opened at $41, well below its IPO price of $46, marking an 11% drop.
The opening share price gave Birkenstock a market value of around $7.7 billion, a substantial decline from its initial public offering valuation of $8.6 billion just a week ago.
This underperformance sent ripples through the market and raised concerns among investors.
Birkenstock’s Storied Legacy
Birkenstock, founded in 1774 by German cobbler Johann Adam Birkenstock, boasts a rich history in footwear.
The iconic cork sandal, designed to mold to the wearer’s foot for ultimate comfort, is a symbol of the brand’s commitment to proper foot health.
Exceptional Growth in Recent Years
Despite its rocky stock market debut, Birkenstock has experienced remarkable growth in recent years.
Its revenue nearly doubled, surging from $770.9 million in 2020 to an impressive $1.3 billion in 2022. The brand’s comfort-focused footwear has resonated with a global audience.
Cinematic Boost and Brand Appeal
Birkenstock received a significant boost when its shoes were prominently featured in the blockbuster movie “Barbie,” notably worn by Margot Robbie.
This exposure led to a nearly 50 percent increase in Google searches during the movie’s release weekend, underscoring the brand’s broad appeal.
Motivations Behind Going Public
Birkenstock’s decision to go public is partly attributed to internal family issues. CEO Oliver Reichert revealed that while keeping the brand family-owned would have been ideal, complications within the family prompted the decision to make the company public.
Investor Caution and Valuation
Investors have expressed caution about Birkenstock’s offering price and potential challenges the brand may face.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, pointed out that there is a degree of uncertainty among investors regarding the brand’s future.
Comparative Market Values
Birkenstock’s market valuation of $7.7 billion is notable, but it pales in comparison to giants like Nike, valued at $149.8 billion, and even Crocs, with a market cap of around $5.4 billion as of Wednesday afternoon.
The brand’s value is also significantly higher than the price paid by a private equity group backed by French billionaire Bernard Arnault and LVMH for a controlling stake in 2021.
IPO Success Amidst Market Trends
Birkenstock’s IPO followed a strong month for US listings, signaling positive trends in the market. During the offering, the company successfully sold a total of 32.3 million shares, raising approximately $495 million.