In pictures: How Birkenstock's weak debut mistimed the shaky IPO market

Timing can sometimes be everything when it comes to an IPO

Last updated: October 17, 2023 | 10:13

Compiled by Nivetha Dayanand, Web Editor, with inputs from Reuters

2 MIN READ

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Birkenstock Holding, a 249-year-old footwear brand, had a disappointing debut on Wall Street, closing down 12.6% on its first day of trading in a US IPO.

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This marked the worst first-day performance in a US IPO of $1 billion or more since AppLovin Corp.'s debut in April 2021.

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Factors contributing to Birkenstock's poor IPO performance include bad market timing, public holidays, a potential US government shutdown, and an outbreak of war in Israel during its investor roadshow.

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A decline in earnings from LVMH, Birkenstock's indirect backer, just before the IPO further impacted its performance.

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LVMH's reported 9% rise in third-quarter revenue fell short of analyst expectations, affecting the luxury sector and potentially influencing investor sentiment.

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Global stock market volatility in October had already started to shake confidence in IPOs, leading to the postponement of some planned share sales.

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Birkenstock's pricing strategy aimed for a first-day "pop," but even at $46 per share, it may have been overvalued compared to peers.

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The company's decision to allocate 90% of its IPO shares to long-only investors and its avoidance of hedge funds may have reduced liquidity and contributed to the stock's decline.

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Birkenstock's poor debut is causing other companies, including Rubrik Inc. and Turo Inc., to reconsider their IPO timelines.

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The decline in Birkenstock's stock price left the company with a market value of about $6.8 billion.

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