{"id":71804,"date":"2023-10-12T09:47:49","date_gmt":"2023-10-12T13:47:49","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/birkenstocks-stock-falls-nearly-13-in-trading-debut-ends-well-below-ipo-price\/"},"modified":"2023-10-12T09:47:53","modified_gmt":"2023-10-12T13:47:53","slug":"birkenstocks-stock-falls-nearly-13-in-trading-debut-ends-well-below-ipo-price","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=71804","title":{"rendered":"Birkenstock\u2019s stock falls nearly 13% in trading debut, ends well below IPO price"},"content":{"rendered":"
\n

Iconic German sandal maker Birkenstock Holdings Ltd.\u2019s stock fell 12.6% in its trading debut Wednesday, signaling that investors remain cautious about new deals and the casual-footwear market remains competitive. <\/p>\n

The company\u2019s initial public offering\u00a0priced at $46 a share late Tuesday, a bit shy of the midpoint of its expected range, and closed at $40.20. The company
\n BIRK,
\n -0.50%<\/bg-quote>
\n is trading on the New York Stock Exchange under the ticker \u201cBIRK.\u201d Goldman Sachs, JPMorgan and Morgan Stanley were the lead underwriters on the deal. <\/p>\n

\n

The deal was expected to prove the latest test for the IPO market, which recently saw three key deals perform strongly on their first day of trade, only to fall back in subsequent sessions.<\/p>\n

Chip maker Arm Holdings Ltd.
\n ARM,
\n -3.48%<\/bg-quote>
\n ;\u00a0Klaviyo\u00a0
\n KVYO,
\n -2.44%<\/bg-quote>
\n a digital marketing company; and Instacart, which trades as Maplebear Inc.\u00a0
\n CART,
\n -0.28%<\/bg-quote>
\n ; all enjoyed strong gains on their first day of trade but pared those in the following sessions. Instacart ended at $24.94 on Wednesday, well below its issue price of $30.<\/p>\n

\u201cSince investors have been burned by many of the IPOs and SPACs from the last few years, there is a common theme of waiting \u201cuntil the dust settles,\u201d said Tom Bruni, senior writer at StockTwits, a social platform for investors and traders.<\/p>\n

\u201cInvestors want to see whether there\u2019s enough support for the stock from institutional investors, as well as how the underlying business is actually growing\/performing before jumping in,\u201d he added. \u201cAnd from a trading perspective, a trend needs to develop first before traders get involved.\u201d<\/p>\n

Birkenstock clearly has its fans, as its customers are brand loyal, with 70% of existing U.S. consumers, for example, purchasing at least two pairs of its shoes, according to its filing documents.<\/p>\n

A survey found 86% of recent purchasers said they wanted to buy again, while 40% said they did not even consider another brand while buying.<\/p>\n

But as Kyle Rodda, Senior Market Analyst <\/strong>at\u00a0Capital.com<\/strong>, said the Birkenstock deal was to be a good measure of broader market sentiment and sentiment toward consumer-sensitive stocks. <\/p>\n

\u201cIt might tell us, too, whether cashed-up millennials like to buy the stocks of products they commonly find on the bottom shelf of their wardrobes,\u201d he said in emailed comments. <\/p>\n

The valuation of around $8.6 billion also looks rich, he said. Based on the company\u2019s latest revenue release, the stock\u2019s price-to-sales ratio is above 6, \u201cwhich is at the higher end of comparable consumer discretionary companies on Wall Street.<\/p>\n

\u201cIn a higher interest rate environment, these multiples may be hard to sustain in the short term, especially if consumer spending slows as expected next year as interest rate hikes bite households,\u201d Rodda said.<\/p>\n

David Trainer, Chief Executive of independent equity research company New Constructs, said ahead of the deal that the valuation was far too high, noting that it was higher than peers such as Skechers USA Inc.\u00a0
\n SKX,
\n -0.43%<\/bg-quote>,<\/span>
\n \u00a0Crocs Inc.
\n CROX,
\n +0.59%<\/bg-quote>
\n \u00a0and Steve Madden Ltd.\u00a0
\n SHOO,
\n -0.85%<\/bg-quote>.<\/span>\n <\/p>\n

\u201cEven more shockingly, the only footwear companies with a larger market cap are Nike Inc.\u00a0
\n NKE,
\n +1.27%<\/bg-quote>
\n \u00a0and Deckers Outdoor\u00a0
\n DECK,
\n -0.24%<\/bg-quote>,<\/span>
\n \u201d he said, referring to the maker of Uggs.\u00a0<\/p>\n

\u201cWhile Birkenstock is profitable, we think it is fair to say that the $8.7 billion valuation mark is too high, especially for a company that was valued at just $4.3 billion in early 2021. Not a whole lot has changed since then,\u201d Trainer said in a report. <\/p>\n

For more, see:<\/strong>\u00a0Birkenstock is going public: 5 things to know about the iconic German sandal maker\u2019s IPO designs<\/p>\n

Trainer estimated that Birkenstock would need to generate more than $3.8 billion in annual revenue to justify its valuation, which is more than three times the $1.24 billion chalked up for all of 2022,\u00a0according to its filing documents with the Securities and Exchange Commission.<\/p>\n

\u201cWe don\u2019t doubt that Birkenstock has strong brand equity and produces stylish sandals, but there is really no reason for this company to be public,\u201d said Trainer. \u201cWe don\u2019t think investors should expect to make any money by buying this IPO.\u201d <\/p>\n

The Renaissance IPO exchange-traded fund
\n IPO
\n has gained 29% in the year to date, while the S&P 500
\n SPX
\n has gained 13%. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Iconic German sandal maker Birkenstock Holdings Ltd.\u2019s stock fell 12.6% in its trading debut Wednesday, signaling that investors remain cautious about new deals and the casual-footwear market remains competitive. The company\u2019s initial public offering\u00a0priced at $46 a share late Tuesday, a bit shy of the midpoint of its expected range, and closed at $40.20. The […]<\/p>\n","protected":false},"author":1,"featured_media":71805,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-71804","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nBirkenstock\u2019s stock falls nearly 13% in trading debut, ends well below IPO price | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Iconic German sandal maker Birkenstock Holdings Ltd.\u2019s stock fell 12.6% in its trading debut Wednesday, signaling that investors remain cautious about new\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=71804\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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