Birkenstock Goes Public and It’s Early Stock Performance Isn’t Great
Key Takeaways
- Brikenstock completed its IPO on Wednesday, with the 249 year old company listing on the New York Stock Exchange
- It was a poor start for the sandal maker, with the stock dipping over 12% in the first day of trade
- It’s been a mediocre run for the latest IPO’s with Arm, Instacard and Klaviyo all notching underwhelming initial results
We’ve (surely) all heard of Birkenstocks. The favorite footwear of everyone from college students in the summertime to dorky dads wearing socks with sandals has been a fashion staple for decades, and that makes it likely to be a very valuable company.
So after being in business for 249 years (that’s not a typo, the company was founded in 1774, two years before the American declaration of independence!), they have finally decided to list on the public markets.
And after a long ‘IPO winter’ of very little in the way of initial offering activity, Birkenstock has been one of the bigger names to move their shares into public hands. But so far, the results have been underwhelming.
Let’s get into how the Birkenstock IPO performed.
The Birkenstock IPO
The initial share price the company floated at was $46, but when markets opened on Wednesday trading began at $41. Not the greatest start. Over the course of the day it continued to trend downwards, finishing its first session down 12.61% to close at $40.20.
This trend has continued in early trade on Thursday, with the stock dipping at the open and hovering at under $39 at the time of writing.
Not a good result for the company, and according to data from the London Stock Exchange Group, Wednesday’s close makes it the worst start to an IPO for a unicorn company in over two years.
How the IPO landscape looks
But Birkenstock investors can take at least some solus in the fact that it’s not just them. After the volatile market of 2022 slammed the brakes on IPO activity, we’ve seen a trickle of high profile names reignite their plans this year.
Instacart, chip maker Arm, and e-commerce marketing darling Klaviyo have all been broadly disappointing in their price action since their initial public offerings.
The bottom line
It’s clear that we are far from boom times right now. It’s a tricky market and a tricky economy, and throwing money at any IPO (a strategy that may have worked at certain times in the past) is not a guaranteed way to generate returns.
Does that mean companies like Birkenstock, Arm and Instacart are bad businesses? No. Over the short term, a stock’s price action has very little to do with the underlying fundamentals of the company.
Values drift with the overall sentiment of the market, and it’s common for very strong businesses with solid balance sheets to see significant stock price reductions. Even if profits and growth remain strong.
For investors, it’s a reminder to take a long term view and to ensure they have sufficient diversification, to ensure they are set up for long term wins.
