Do you choose the shiny pink heels and stay in Barbieland, or do you enter ‘the real world’ in flat Birkenstocks? Actress Margot Robbie has been successful for a long time Barbiefilm when she is faced with that choice as Barbie. She grabs the sandals and goes for the adventure.
Gratefully, Birkenstock hitched a ride on the Barbie hype this summer. In the weeks following the premiere, searches for the sandals worn by Robbie doubled. For the German footwear manufacturer, the publicity was the perfect prelude to the IPO in New York, which had been prepared for months. The share went over the counter for the first time on Wednesday, but at a lower price than the owners hoped. At the close of trading, a share was worth $40.20, about 13 percent less than the launch price of $46.
The valuation of investors therefore amounted to 7.5 billion dollars (more than 7 billion euros), about 1.5 billion dollars less than Birkenstock was aiming for. Earlier this month, the company had revised its IPO expectations upwards, from $8 billion to $9 billion. It did this based on discussions with potential investors and the good profit margins: last year the profit was almost 400 million euros, on a turnover of 1.2 billion euros. The Norwegian state fund, which manages oil and gas revenues, investor Durable Capital Partners and billionaire Bernard Arnault had already announced their intention to participate.
Not too sad
However, the owners of Birkenstock do not have to be too sad about the course of the first trading day. The company is still worth much more than the sum that venture investor L Catterton paid in 2021 for the almost 250-year-old family business. The private equity party acquired two-thirds of the shares from the founding Birkenstock family, valuing the company at $4.8 billion.
Remarkably, it is the third major American IPO in a short period of time in which the share drops below the introduction price after launch. In September, British chip company Arm and delivery company Instacart initially debuted successfully, only to plummet. Compared to the opening price, almost a month later, the companies are down 14 and 26 percent respectively.
Due to rising inflation and higher interest rates, companies have postponed or even canceled an IPO in recent years. In the Netherlands, the latter applied, for example, to the Mirage Retail Group and bol (formerly bol.com). The large IPOs of Arm, Instacart and Birkenstock are therefore seen by investors and companies as tests for the stock market climate. A successful entry can inspire companies that are still waiting to list on the stock exchange.
The fact that the IPOs of the three newcomers to the American stock exchange are lagging behind expectations may have consequences for upcoming IPOs (initial public offerings). A number of large IPOs are also planned in Europe. For example, Europe’s largest private equity company CVC Capital Partners has been considering a stock exchange listing in Amsterdam for some time, but this has been postponed several times. This should finally happen in November, with CVC aiming for a valuation of 20 billion euros, according to Bloomberg. Meanwhile, the German carrier Flix and the perfume maker Douglas from the same country are reportedly preparing to go public in Frankfurt. A date for this has not yet been determined.