German premium footwear maker Birkenstock Holding priced its U.S. initial public offering (IPO) at $46 per share, the middle of its indicated range. The IPO raised about $1.48 billion, valuing the company at about $9.3 billion on a fully diluted basis.
Birkenstock is the fourth major company to launch a U.S. IPO in the last four weeks, following those of chip designer Arm Holdings, grocery deliver app Instacart, and marketing automation platform Klaviyo.
The slew of recent listings briefly raised hopes of a broad recovery in equity capital markets after a nearly 18-month dry spell. However, the three newly listed companies gave up most of their share price gains in the days following their IPOs, raising concerns over the near-term outlook for new stock market launches.
Birkenstock’s decision to price its IPO conservatively is a sign of the caution that is still prevalent in the market. Despite having enough demand to price the share sale at the top of the indicated range, Birkenstock and its underwriters chose to take a more cautious approach. This suggests that they are concerned about the potential for further volatility in the market.
The fact that Birkenstock is still able to raise a significant amount of money in this environment is a testament to the strength of its brand and its business. Birkenstock has a long history and a loyal customer base. It is also well-positioned to benefit from the growing trend towards comfort footwear.
However, it is important to note that Birkenstock is not without its risks. The company faces competition from other footwear brands, such as Nike, Adidas, and Crocs. It is also exposed to the macroeconomic risks associated with a potential recession.
Investors who are considering investing in Birkenstock should carefully weigh the risks and rewards before making a decision. The company is a well-established brand with a strong business, but it is also operating in a challenging environment.
Here are some additional points to consider:
Birkenstock’s IPO valuation is at a premium to other footwear companies. This suggests that investors are betting on Birkenstock’s continued growth and profitability.
Birkenstock is planning to use the proceeds from the IPO to pay down debt and invest in its business. This suggests that the company is committed to long-term growth.
Birkenstock is a family-owned company with a long history. This could be seen as a positive or a negative, depending on the investor’s perspective. On the one hand, it suggests that the company is well-managed and has a strong culture. On the other hand, it could also mean that the company is less likely to be responsive to shareholder demands.
Overall, Birkenstock’s IPO is a positive for the company and its investors. It is a sign that the company is able to raise capital in a challenging environment. However, investors should carefully consider the risks and rewards before making a decision.
German shoe maker Birkenstock files for U.S. IPO amid market recovery