Birkenstock of Germany is planning a $1.5 billion IPO and a US listing

 Birkenstock of Germany is planning a $1.5 billion IPO and a US listing

After achieving a value of $9.3 billion in its US initial public offering, the LVMH-backed German luxury sandal manufacturer Birkenstock was prepared to list its shares on the stock exchange of the United States on Wednesday.

After its 32.3 million shares were carefully priced at $46 each, the company's IPO garnered $1.48 billion, setting the 250-year-old brand up for a successful market debut.

The price of $46 per share was established in the middle, not top, of the initial range, indicating that investors are being somewhat cautious about the brand's future, according to Susannah Streeter, head of money and economics at Hargreaves Lansdown.

After supermarket delivery software Instacart, marketing automation tool Klaviyo, and chip designer Arm Holdings, Birkenstock is the fourth significant firm to announce a US IPO in the last four weeks.

Despite the fact that they all had positive opening days as listed companies, their shares have subsequently given up gains, clouding the picture for the IPO market.

According to Javier Gonzalez Lastra, investment partner at Tema ETFs, Birkenstock has its high degree of profitability to its advantage, at least in comparison to Instacart (the other recent significant IPO in the consumer industry).

"Perhaps this will put Birkenstock in a better position in a situation when real interest rates are high and continuing climbing. However, the stock will be subject to future top-line growth predictions.

For the nine months ending June 30, Birkenstock reported a 21% increase in sales to 1.12 billion euros ($1.19 billion). However, it saw a 20% decline in net profit within the same time frame, to 103.3 million euros.

The Birkenstock family controlled the business, which was established in 1774 in the German hamlet of Langen-Bergheim, for six generations until selling a controlling interest to L Catterton, a PE firm financed by Bernard Arnault of France as well as his luxury goods conglomerate Louis Vuitton Moet Hennessy, in 2021.

After Australian actress Margot Robbie donned a pair of pink Birkenstocks in the climactic sequence of the summer blockbuster "Barbie," the company attracted a lot of media attention.

"Online searches for Birkenstock sandals increased after the release of the film. Similar investor elation may legitimately support the stock's demand in the near future, according to Running Point Capital Advisors partner and CIO Michael Ashley Schulman.

Despite the stock's popularity in popular culture, several industry insiders believe that, at least in the short run, individual investors may not be paying much attention to it.

"It lacks the market-related elements that lend well to becoming a meme stock, namely high short interest, a low free-float, or an enormous news event," said Tommy Tranfo, head of community development at the forum StockTwits, which is geared at retail investors.

"Since investors have been stung by many of the IPOs and SPACs from the past couple of years, there is a common theme of patience until the dust settles," Tranfo said.

Nearly 83% of the sandal manufacturer will continue to be owned by L Catterton. The PE company had bought a share for around $4.3 billion.

With high-end clothing companies including Dior, Stüssy, Manolo Blahnik, and Rick Owens, the company has relationships.