Quiver Quantitative - Birkenstock (BIRK), the storied German sandal producer with a rich 250-year history, had a subdued showing during its U.S. market debut, with opening share prices anticipated to be up to 13% beneath their IPO value. The conservative pricing between $40-$42, in contrast with the IPO's $46, might reduce the company's valuation to as low as $8.5 billion. Despite this, it still marks a significant increase from the valuation when L Catterton, backed by Bernard Arnault's luxury behemoth Louis Vuitton Moet Hennessy (LVMH), took a majority stake in 2021.
This tepid investor reception comes on the heels of buoyant market introductions by the likes of Arm Holdings (NASDAQ:ARM), Instacart (NASDAQ:CART), and Klaviyo (NYSE:KVYO). However, these recent entrants have also witnessed their initial gains wane since becoming public entities. Birkenstock's muted debut, despite a considerable boost from its pop culture appearance in the summer blockbuster "Barbie" featuring Margot Robbie, suggests that the brand might not be a focal point for retail investors for the foreseeable future.
While Birkenstock might not meet the typical criteria for a "meme stock" such as significant news events or high short interest, industry experts also cite past disappointments with recent IPOs and SPACs as reasons for investor caution. The sentiment seems to be to wait for stabilization post-IPO before diving in. Notably, Birkenstock's origins trace back to 1774 in Germany and remained within the family's purview for six generations until L Catterton's acquisition. The private equity firm is projected to retain nearly 83% of the brand, which has also recently announced collaborations with elite fashion labels such as Dior and Manolo Blahnik.
On the financial front, Birkenstock has unveiled a 21% surge in its revenue, reporting 1.12 billion euros ($1.19 billion) for the nine months concluding on June 30. However, its net profit for this same span saw a decrease of 20% to 103.3 million euros. The coming months will be pivotal in gauging the trajectory of the brand on the U.S. stock market and understanding how its cultural and financial positions translate into investor interest and value.
This article was originally published on Quiver Quantitative