German shoemaker Birkenstock Holding (NYSE:BIRK) slipped 12.6% to $40.20 in its stock market debut on the NYSE on Wednesday. The stock opened at $41 yesterday, about 11% below the $46 initial public offering (IPO) price set on Tuesday. The lackluster debut reflects the reluctance of investors to IPOs due to macro uncertainty and high interest rates.
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Birkenstock’s Stock Market Debut Fails to Impress
Birkenstock’s public debut marks the fourth IPO in the U.S. over the past month, following Softbank (SFTBY)-backed chip designer company Arm Holdings (NASDAQ:ARM), marketing automation platform Klaviyo (NYSE:KVYO), and grocery delivery platform Instacart (NASDAQ:CART).
Birkenstock sold 10.8 million shares, while stakeholder L Catterton offered 21.5 million shares. Overall, Birkenstock raised $1.48 billion in its IPO. Birkenstock, which is popular for its upmarket sandals, was a family-controlled business until 2021, when private equity giant L Catterton bought a majority stake in the company for $4.85 billion.
“The best thing for the brand would be staying family owned, but within the family there were so many problems, so we go for the second best option and that’s to be public and give the brand back to the people,” said CEO Oliver Reichert while explaining the reason for the company’s decision to go public in an interview with CNBC.
Several stocks that have made their stock market debut this year have lost steam in the subsequent weeks, as investors continue to be wary about new listings due to elevated interest rates. Beauty platform Oddity Tech (NASDAQ:ODD), which is also backed by L Catterton, went public in July. The stock surged 35% on the first day but is now trading below its IPO price of $35.
Overall, the IPO market continues to be sluggish, with macro challenges impacting investor sentiment. Nonetheless, Birkenstock’s management is optimistic about the road ahead. The company intends to expand its global footprint, especially in high-growth regions like Asia Pacific, where it is “meaningfully” underpenetrated.
