Birkenstock stock makes its public trading debut.  Shares below IPO price.

Shares of Birkenstock Holdings

The maker of cork-soled clogs made a rocky stock market debut on Wednesday.

The stock (ticker: BIRK ) opened at $41 on the New York Stock Exchange Wednesday afternoon, down 11% from its IPO price of $46 a share. It ended the day down 12.6% at $40.20 a share.

The German shoemaker’s IPO is expected to price between $44 and $49 a share, according to documents filed last week.

Birkenstock raised $1.58 billion and had a market value of $7.7 billion at the opening price, not counting shares for employees and executives. At closing price, the company has a market value of $7.55 billion.

However, Birkenstock has a larger market cap than Alberts, Skechers ( SKX ), Crocs ( CROX ), and Steve Madden ( SHOO ) and its valuation is about $4.3 billion higher than what private-equity firm L Catterton paid to buy the company. In early 2021.

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Javier Gonzalez Lastra, Portfolio Manager

Tema is a luxury exchange traded fund

( LUX ), LVMH Moet Hennessy Louis Vuitton said on Tuesday that lackluster results dampened investor appetite for consumer-facing brands. LVMH saw revenue growth slow in its latest quarter and warned that high-income European consumers were slowing. With 36% of Birkenstock’s revenue coming from Europe in fiscal 2022, LVMH’s comments “will inevitably have an impact” in the short term, Gonzalez Lastra said.

Gonzalez Lastra considered joining the IPO, but decided against it. “I find it very difficult to make a high-confidence judgment,” he said in a call Baron’s Wednesday.

Some investors were skeptical early on. To justify the roughly $8.6 billion valuation Birkenstock was targeting, it would need to generate annual revenue of more than $3.8 billion — or three times its fiscal 2022 revenue, David Trainor, CEO of investment research firm New Constructs, said ahead of the IPO.

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“We don’t see this happening anytime soon,” he wrote in a research note last week. “BIRK looks overvalued and doesn’t offer much upside potential for investors.”

Birkenstock’s public debut was a threat to other recent IPOs, whose shares fell after a first-day pop. Shares of chip designer Arm Holdings ( ARM ) fell below their opening trade after an impressive debut. Shares of delivery platform Maplebear ( CART ), Instacart’s holding company, retreated below their IPO price. Shares of Cava Group ( CAVA ), the fast-casual Mediterranean chain that went public over the summer, are trading below their opening price. Despite opening at $21.21 in November 2021, shares of fellow footwear company Allbirds ( BIRD ) can now trade for under a dollar. Allbirds is now worth approximately $144 million.

Birkenstock’s high valuation reflects the company’s success over the past few years, says Neil Saunders, managing director and retail analyst at research firm Global Data. Birkenstock’s revenue rose from €727.9 million ($770.9 million) in fiscal 2020 to €1.24 billion ($1.3 billion) in fiscal 2022. Net profit rose to around €86 million ($91 million) in the period.

Birkenstock also has many supporters. L Catterton—which is affiliated with the private equity arm of LVMH Moët Hennessy Louis Vuitton.

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(LVMHF) will be the majority owner of the company after the 2016 offering. The company has received financing offers from several investors including Financière Agache, Durable Capital Partners and Norges Bank Investment Management.

Corrections & Amplifications: Birkenstock shares opened at $41 a share. An earlier version of this article incorrectly stated $41.97.

Write to Sabrina Escobar at [email protected]

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