'Kkwadang' Slipped Birkenstock... Plunges 13% on First Day of Listing

High PER 'Burden' Compared to Peers
Overall Downturn in Luxury Industry Also Negatively Affects

German luxury sandal company 'Birkenstock' saw its stock plunge 13% in its first trade after going public on the New York Stock Exchange (NYSE).

Previously, Birkenstock had set its offering price at $46 the day before. However, in the first trade, the stock closed at $40.20, down $5.80 (12.61%) from the offering price. The opening price also started at $41, already 11% below the offering price.

As a result, the market capitalization fell significantly short of the target. Applying the $46 offering price, the market cap was estimated at around $8.64 billion, but Birkenstock's current market cap is only about $7.6 billion.

Birkenstock Sandals [Image source=Birkenstock]

The reason for the stock plunge appears to be that Birkenstock initially set an excessively high offering price. According to U.S. stock market analysis media 'Barron's,' based on the confirmed offering price, Birkenstock's price-to-earnings ratio (PER, market capitalization divided by annual net income) was 27 times.

For comparison, Deckers Outdoor, a luxury shoe company already established in the market, has a PER of 22 times, and Crocs is around 7 times. The world's largest luxury conglomerate Mo?t Hennessy Louis Vuitton (LVMH) also has a PER of about 22 times. This made it unavoidable to face criticism of a 'valuation bubble.'

Birkenstock is not the only company experiencing sluggish stock performance after its IPO. ARM Holdings, a British semiconductor design company that recently attracted attention with its 'blockbuster listing,' closed down 1.85% at $54.68 on the same day. Instacart, a food delivery startup that went public around the same time, plunged 7.36% to $24.94.

The recent bleak outlook for the luxury industry is also a factor weighing on Birkenstock's stock price. LVMH's stock fell 6.46% that day due to quarterly earnings that missed expectations. Analysts suggest that sluggishness in major countries, including China, has dampened the sentiment of luxury consumers.

Birkenstock is a historic shoe manufacturer founded in 1774 in Langenberg, Germany. It is especially famous for its sandals.

Birkenstock sandals became even more famous as they were favored by several celebrities, including the late Steve Jobs. The headquarters and main production facilities remain in Germany, employing 6,200 people worldwide.

This content was produced with the assistance of AI translation services.