Birkenstock (BIRK) stepped into the public market on Wednesday.
Shares of the shoemaker debuted at $41 a share on the New York Stock Exchange under the ticker symbol “BIRK.” The company priced shares on Tuesday evening at $46 a share.
The company initially proposed a range of $44 to $49 per share, which set it up to raise roughly $1.48 billion. When combined with ordinary shares outstanding after the completion of the offering, Birkenstock landed an expected valuation of $8.6 billion.
Based on the amount raised, Birkenstock’s IPO is the third-biggest US IPO of the year.
Shares open nearly 11% below its initial price
Investors didn’t react the way the company anticipated.
“Kudos to them getting it done” amid market volatility, Ben Laidler, eToro global markets strategist, told Yahoo Finance over the phone. “Markets have obviously been pretty choppy. It’s pretty big valuation … they clearly pushed the envelope there and I think you’re seeing some of the repercussions of that today.”
So far this year, large IPOs have had a lukewarm reception.
Shares of Instacart are down 16.5% from its IPO debut as of Wednesday, after a choppy initial reaction from investors. Shares of England-based chipmaker Arm (ARM) are also down more than 8% from its IPO price. Software firm Klaviyo (KVYO) shares are relatively flat. Cava’s stock (CAVA), which soared in its IPO debut earlier this summer, has dropped nearly 16%.
This sort of reaction is making investors wary of jumping in on day one.
“With so few IPOs holding up after their first day, investors are just throwing in the towel,” Renaissance Capital’s Matt Kennedy told Yahoo Finance over the phone. “Why should I buy on day one, if every other IPO is losing me money?”
This was supposed to be the comeback after a long dry spell in the IPO market, but “at this point, you have to say that was probably a false storm” of its official return, Laidler said.
“Investors are still in the driver’s seat,” Kennedy said, “public investors want to see very attractive valuations. They don’t want to see … a good company come public, at the high end or above where its peers are trading.”
Now future companies eyeing the public market will likely think hard about their strategy.
Laidler said investors can expect “very high-quality IPOs, or the most desperate companies trying to come to market.”
While Wall Street’s reaction wasn’t too welcoming, this is just another chapter for the German footwear brand. Founded in 1774, Birkenstock’s origin story began 249 years ago and CEO Oliver Reichert is determined to take it into the future.
In fiscal 2022, the company brought in 1.24 billion euros and sold 30 million units. It has been growing at an annual rate of 20% from fiscal 2014 to last year.
“Despite this heritage, Birkenstock remains empowered by a youthful energy level, with all the freshness and creative versatility of an inspired Silicon Valley startup,” Reichert wrote ahead of Birkenstock’s IPO. “We have retained the original spirit of our forefathers who laid the foundation of a global business that is more relevant than ever before.”