Cramer’s Advice on Birkenstock IPO

Birkenstock IPO

Jim Cramer, a financial expert, advised investors to exercise caution when considering the initial public offering (IPO) of German sandal maker Birkenstock. The company is set to enter the market with a valuation of around $10 billion, aiming to price shares at the top end of the $44 to $49 range. Cramer suggested that investors might want to wait and avoid the “initial feeding frenzy” around the IPO.

Cramer expressed concerns about the potential high valuation of Birkenstock right after the IPO, cautioning that it might become even more expensive in the initial surge of interest. He emphasized that it’s generally not a good idea to buy shares right at the beginning of an IPO, and this sentiment holds particularly true for Birkenstock, as the company doesn’t need to underprice its shares to attract attention.

While Birkenstock has gained significant popularity in recent years, Cramer questioned whether it is a passing trend or has enduring staying power. Despite this uncertainty, he acknowledged the company’s solid growth, profitability, and positive margin trends.

Cramer highlighted that a substantial portion of the company’s shares is already spoken for, with major investors, including a company associated with luxury goods giant LVMH and a Norwegian hedge fund, reportedly purchasing approximately 42% of the available shares.

He cautioned against buying the stock in the open market with a market order, as many IPOs with hot starts often end poorly for those who acquire shares at the beginning. Cramer recommended that investors might be better off waiting on the sidelines for the stock to cool down after the initial surge.

The cautionary advice from Cramer is based on the potential risks associated with the high valuation and the uncertainties regarding the long-term sustainability of Birkenstock’s popularity in the market.

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