Birkenstock, the renowned German luxury sandal seller, faced a second day of losses on Wall Street as its shares dipped by 6% on Thursday. These losses deepened the decline following its Wall Street debut, which didn’t meet expectations.
During its initial trading day on Wall Street, Birkenstock witnessed a significant drop, falling over 12% from the initial public offering (IPO) price of $46, despite successfully raising $1.48 billion. The company had initially aimed to price the IPO at as much as $49 per share.
As of Thursday, Birkenstock’s shares were trading at approximately $37.79, marking an 18% decrease from its IPO price.
Notably, the second-day decline in Birkenstock’s shares was more pronounced than the broader Wall Street sell-off, with the S&P 500 index experiencing a 1% decline.
This underwhelming U.S. market debut follows similar weak performances from other companies that recently went public, including chip designer Arm Holdings and grocery delivery platform Instacart, previously known as Maplebear. Both of these companies had their IPOs last month and have struggled to gain traction.
Investors had high hopes that these prominent companies would reinvigorate the market for public listings, but the recent volatile market conditions have dampened the demand for IPOs.
On Thursday, Arm Holdings saw a 5.2% drop in its share price, trading at $51.70, just above its $51 IPO price on September 13. Instacart also experienced a 1.7% decline, with shares at $24.52, well below its $30 IPO price on September 18.
Even with the losses, Birkenstock maintains a market capitalization of approximately $7 billion, or nearly $8 billion on a fully diluted basis. This valuation is still nearly double the $4.35 billion that L Catterton, the U.S. private equity firm backed by French billionaire Bernard Arnault and his luxury goods empire Louis Vuitton Moet Hennessy, paid to acquire a majority stake in Birkenstock in 2021.
Birkenstock’s IPO coincided with a sharp drop in LVMH’s shares following the luxury brand’s slower third-quarter sales growth.
«The timing of the IPO was somewhat unfortunate as it followed LVMH’s Q3 results, in which management highlighted the significant deterioration in European consumer sentiment in Q3,» noted Javier Gonzalez Lastra, Investment Partner at Tema ETFs.
