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Birkenstock’s IPO turned south after shares closed down 13% on first day of trading

Analysis by Elisabeth Buchwald, CNN

New York (CNN) — It’s official: Birkenstock is a publicly traded company after debuting on the New York Stock Exchange Wednesday under the ticker symbol BIRK. But it was tough first day for the beloved cork-soled shoemaker.

Birkenstock priced its initial public offering at $46 a share — in the middle of the price range it indicated last week — which gave it an $8.6 billion valuation. However, it opened 11% below the IPO price, at $41 a share. Shares slid even further, closing down by almost 13%.

The backstory

As Nightcap recently wrote, Birkenstocks are having something along the lines of a Crocs moment. Both shoe brands experienced a surge of popularity but lost their luster and were demoted to fads. Then, decades after their peaks, they made miraculous comebacks.

Now even supermodels wear them.

OK but is Birkenstock really worth $8.6 billion?!

Just like beauty is in the eye of the beholder, how much publicly traded companies are worth is ultimately a function of how much traders think they’re worth.

And yes, it’s pretty wacky when traders rushed to buy a stock like Bed Bath and Beyond when it was hanging by a thread.

But that’s a story for another time… (Spoiler alert: It didn’t last very long.)

Before trading began on Wednesday, Birkenstock essentially said it thinks it is an $8.6 billion company.

But then regular people got in on the action — and said, “I don’t think so.”

Generally, when people think the price it’s trading at is low relative to what they think the company is worth, they tend to hit the buy button in their brokerage accounts. Or if they think it’s too high relative to what they think it’s worth, they short it.

As masses of traders made those judgment calls in real time Wednesday, the stock’s price fluctuated.

But just for funsies…Here’s how Birkenstock stacks up to other publicly traded shoemakers:

  • Nike: $149 billion
  • Deckers Outdoor (the parent company of Ugg, Hoka, Teva and more): $13.29 billion
  • Sketchers: $7.53 billion
  • Crocs: $5.36 billion
  • Steve Madden: $2.44 billion

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Article Topic Follows: CNN - Business/Consumer

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