LVMH-backed Birkenstock (BIRK.N) was set to list its shares on the New York Stock Exchange on Wednesday after the German luxury sandal maker notched a valuation of $9.3 billion in its U.S. initial public offering (IPO).
The company's IPO raised $1.48 billion after its 32.3 million shares were conservatively priced at $46 apiece, positioning the 250-year-old brand for a smooth market debut.
"It's clear there is some caution among investors about the path ahead for the brand, as the price set of $46 a share was at the middle, not top end of the initial range," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Birkenstock is the fourth major company to launch a U.S. IPO in the last four weeks following those of chip designer Arm Holdings , grocery delivery app Instacart (CART.O) and marketing automation platform Klaviyo (KVYO.N).
Although all of them had an upbeat first day as listed entities, their shares have given up gains since then, muddying the outlook for the IPO market.
As of Tuesday's close, Instacart shares were 10% below their IPO price. Arm and Klaviyo are relatively stable, closing 9% and 16% above their IPO prices, respectively.
"Birkenstock has in its favor, at least relative to Instacart (the one recent sizable IPO in the consumer space), its high level of profitability," said Javier Gonzalez Lastra, investment partner at Tema ETFs.
"Arguably, this should position Birkenstock more favorably in an environment where real interest rates are high and still rising. The stock, however, will be sensitive to expectations of top-line growth in coming months."
Birkenstock had disclosed a 21% jump in revenue to 1.12 billion euros ($1.19 billion) for the nine-month period ended June 30. Its net profit for the same period, however, fell 20% to 103.3 million euros.
Founded in 1774 in the German village of Langen-Bergheim, the company was run by the Birkenstock family for six generations, until a majority stake was sold to L Catterton, the PE group backed by France's Bernard Arnault and his luxury goods empire Louis Vuitton Moet Hennessy (LVMH.PA), in 2021.
The brand gained widespread attention after Australian actress Margot Robbie wore a pair of pink Birkenstocks in the final scene of the hit movie, "Barbie", which was released this summer.
"The movie fueled a spike in online searches for Birkenstock sandals. Similar investor excitement could reasonably fuel near-term demand for the stock," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
Despite all its pop-culture allure, some industry experts say that the stock may not be on retail investors' radar at least in the near term.
"It lacks the market-related factors that lend well to becoming a meme stock like high short interest, a low free-float, or a major news event," said Tommy Tranfo, head of community at retail-investor-focused forum StockTwits.
"Since investors have been burned by many of the IPOs and SPACs from the last few years, there is a common theme of waiting until the dust settles," Tranfo added.
L Catterton will continue to own nearly 83% of the sandal maker. The PE firm had acquired a stake at a valuation of about $4.3 billion.
Birkenstock has partnership deals with luxury fashion brands, including Dior, Stüssy, Manolo Blahnik and Rick Owens.
Goldman Sachs, JPMorgan Chase and Morgan Stanley were the lead underwriters for the IPO.
($1 = 0.9431 euros)
