Birkenstock, the German luxury sandal seller, continued to face challenges as its stock price dropped for the second consecutive day on Wall Street. On Thursday, the company experienced a 6% decline, further intensifying its losses from its disappointing debut the day before. During its first session on Wednesday, Birkenstock witnessed a significant decrease of over 12% from its initial public offer price of $46, despite managing to raise $1.48 billion through the IPO. Initially, the company had aimed to price the IPO at up to $49 per share. As of Thursday, the stock was trading at approximately $37.79, representing an 18% drop from its IPO price.

What’s interesting is that Birkenstock’s second-day drop was more significant than the broader sell-off on Wall Street, with the S&P 500 only experiencing a 1% decrease. This lackluster performance during its U.S. market debut echoes the weak showings of other companies like Arm Holdings, a chip designer, and Instacart, a grocery delivery platform, following their recent IPOs. These high-profile companies were expected to rejuvenate the public listings market, but volatile market conditions over the past couple of years have dampened the demand for IPOs. On Thursday, Arm witnessed a 5.2% slump, trading slightly above its IPO price of $51, while Instacart experienced a 1.7% decrease, settling at $24.52, well below its IPO price of $30.

Despite the recent losses, Birkenstock’s market capitalization currently stands at around $7 billion, or nearly $8 billion on a fully diluted basis. This valuation is almost double the $4.35 billion at which L Catterton, the U.S. private equity firm backed by French billionaire Bernard Arnault and his luxury goods empire Louis Vuitton Moet Hennessy, acquired a majority stake in Birkenstock in 2021.

It’s worth noting that Birkenstock’s listing on Wednesday coincided with a significant decline in LVMH’s shares, following the luxury brand’s slower third-quarter sales growth. This unfortunate timing could have influenced the market’s perception of Birkenstock’s IPO. Javier Gonzalez Lastra, an Investment Partner at Tema ETFs, suggests that the timing of the IPO was unfavorable, as it followed LVMH’s Q3 results, which revealed a notable deterioration in European consumer behavior during that period.

Overall, Birkenstock’s performance on the stock market in its first days has been underwhelming. Investors will keenly observe whether the company can recover and regain investor confidence in the forthcoming weeks.

Useful links:

1. Reuters: Birkenstock falls after US stock market debut
2. CNBC: Birkenstock’s US stock market debut handily misses