Birkenstock: What You Need to Know About the IPO

The September IPO target is expected to fetch an $8 billion valuation

• Birkenstock is considering going public in September with an IPO valuation that exceeds $8 billion.
• The potential IPO is turning heads, as the IPO environment has been quiet amid economic concerns.
• Margot Robbie recently wore a pair of pink Birkenstocks in the billion-dollar blockbuster Barbie, boosting public awareness and sentiment.

Birkenstock: what you need to know (brief history, company overview)

Birkenstock, a shoe manufacturer founded in 1774 Germany, is known for its popular open-toe sandal with a cork footbed that helps to support the natural contour of the consumer's foot.

The company went on to create the "Carl Birkenstock System" in 1932, which was endorsed by podiatrists and physicians at the time.

These popular sandals hit the shelves in the United States in 1966. Now, with health, wellness and post-pandemic outdoor activities more popular than ever, they have become a timeless classic.

Since then, the company has modernized production to reduce energy consumption and improve efficiency, and it has expanded well outside of Germany.

What does Birkenstock do?

Birkenstock has grown to become a major, global shoe manufacturer, focusing on sandals and slippers. The company focuses on quality production, and has been an innovative contributor to the way sandals are worn and made to this day.

It even sells a 1774 collection, which features a modern version of the original footbed the company used by the company hundreds of years ago.

Meanwhile, it continues to offer the Birkenstock branded sandal, which the company deems "consciously healthy shoes" on its website.

It also has a sub-brand called papillio, which is its feminine brand that features trendy colors and materials like animal prints and floral patterns.

With men, women, professional and kids sub-categories, the company really has a shoe for everyone.

Is Birkenstock owned by LVMH?

LVMH Moët Hennessy Louis Vuitton (LVMUY), owned by Bernard Arnault who is also behind companies like Christian Dior (CHDRY), purchased a majority stake in Birkenstock to help expansion efforts into China and India. The deal was said to be valued at around $4 billion.

Why does Birkenstock want to go public?

When a company goes public, it offers the public the ability to invest in the company itself by purchasing shares of stock on an exchange. That helps the company raise capital, which can be used for growth and expansion efforts. Generally speaking, companies that go public want to grow in one way or another. The tradeoff is that the company typically loses at least a little bit of control, as it now has to answer to the public and report quarterly earnings.

Reports of Birkenstock going public could be tied to international growth efforts because the company has stated it wants to expand its reach to China and India. LVMH also controls many other global high-fashion companies, so the expansion makes sense.

Birkenstock estimated valuation ($8 billion)

The Birkenstock IPO valuation is said to be in the range of $8 billion. IPOs are set by the banks that underwrite the deal. In this case, it's been said JP Morgan Chase & Co (JPM) and Morgan Stanley (MS) have been working on the deal. The final price of an IPO is determined based on investment demand, and the share price itself will then be determined by how many shares will be offered from the start.

How to trade Birkenstock stock

Trading IPOs can be exciting, especially the first week the company is available to trade publicly. Once Birkenstock hits the IPO market, a trading date will be set, and the company will then be available to trade on most brokerage firms—like tastytrade, for example.

Usually, the stock is available to trade at first, and then options markets open up as demand for trading data is gathered.

Once stock and options markets are both open for a new stock, traders and investors have plenty of flexibility to set their risk tolerance and trade more complex strategies, compared to just buying and selling stock.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb

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