APD - Wall Street Breakfast Podcast: Birkenstock IPO

2023-10-11 06:53:54 ET

Summary

• Birkenstock prices IPO at $46 per share, raising close to $1.5B and valuing the company at just under $9B.
• The Biden administration is set to announce up to $7B in funds for hydrogen hubs in the US.
• Samsung Electronics expects a decline in Q3 operating profit.

Listen below or on the go on Apple Podcasts and Spotify

Birkenstock ( BIRK ) prices IPO at $46 per share as footwear company looks for $9B valuation. (00:25) U.S. to award $7B in funds for hydrogen hubs this week, reports say. (01:41) Samsung Electronics ( SSNLF ) expects 78% drop in Q3 operating profit. (02:35)

This is an abridged transcript of the podcast.

Birkenstock ( BIRK ) priced its IPO at $46 per share after setting an initial expected range of $44 to $49 per share.

32M shares will be available to the public today. The footwear company will raise close to $1.5B at that level and be valued at just under $9B.

The 250-year-old brand saw a spike in interest during the summer after Mattel's ( MAT ) Barbie movie featured actress Margot Robbie wearing the sandal in a rose color.

The footwear company said it skews female generally, with women comprising 72% of its customers. However, recently Birkenstock has introduced new products in an effort to increase its customer base.

Of note, Birkenstock ( BIRK ) is going public amid heightened concerns on consumer spending on discretionary categories such as footwear. The last significant IPO in the footwear sector was Allbirds ( BIRD ), which has shrunk to a market cap of $159M.

In its IPO filings, Birkenstock said it would use the proceeds to pay down debt, although some analysts expect some of the funds to be invested in growth initiatives as well.

Birkenstock has about 6K wholesale partners and a small network of about 45 of its own small stores.

The Biden administration is set to announce this Friday as much as $7B in federal grants to build out regional hydrogen projects, according to multiple media reports.

The infrastructure bill passed by Congress in 2021 allocated up to $7B to launch the Regional Clean Hydrogen Hubs program , which will help fund 6-10 regional clean hydrogen hubs across the U.S.

Among top contenders for Department of Energy funding, according to Bloomberg, are a Rochester, New York, project led by a coalition of northeast states in conjunction with Plug Power (NASDAQ: PLUG ), and a California-based public-private partnership that includes Amazon ( AMZN ) and Air Products & Chemicals ( APD ).

A West Virginia hydrogen hub backed by Senator Joe Manchin that is partnering with natural gas producer EQT Corp. ( EQT ) also is under consideration.

Samsung Electronics ( OTCPK:SSNLF ) said it estimates a 77.9% decline in Q3 operating profit. Samsung’s semiconductor business is still battling to recover from an industry wide downturn, although analysts believe memory chip prices may have bottomed.

The South Korean electronics giant expects to report operational profit for the July–September quarter of KRW 2.4T ($1.79B), down from KRW 10.85T for the year-ago period, but higher than Q2's KRW 0.67B. Samsung's ( OTCPK:SSNLF ) revenue is expected to fall 12.7% Y/Y to KRW 67T ($49.91B).

Even so, Samsung Electronics' shares on the South Korean exchange rose 3%. "It's better than expected," said Ko Yeongmin, a Daol Investment & Securities analyst, told Reuters. "Although the situation is not great in the chip business... the decline in memory prices is easing."

Memory chip prices had declined significantly this year due to a glut brought on by poor demand for final goods like smartphones and laptops.

Samsung's detailed earnings report will be released on October 31.

Other articles to look out for on Seeking Alpha:

Clean energy stocks rally as France aims to double output from renewables

The Las Vegas Strip will have a new mega resort opening in December

American Airlines suspending flights to Israel through early December

On our catalyst watch for the day,

• Open Text ( OTEX ) will hold its OpenText World 2023 event in Las Vegas. The company says it will discuss AI trends, explore various use cases, demo OpenText Aviator solutions, and highlight how businesses can scale AI-led processes.

• Box ( BOX ) will hold a Virtual Investor Product Briefing.

U.S. stocks on Tuesday ended higher, boosted by falling Treasury yields and further favorable commentary from Federal Reserve officials.

The Nasdaq ( COMP.IND ) led the three major averages, advancing 0.58%. The S&P 500 ( SP500 ) added 0.52%, with the benchmark index posting a three-day win streak for the first time since late August. The Dow ( DJI ) gained 0.40%.

Ten of the 11 S&P sectors ended in positive territory. Energy was the only exception. Utilities and Consumer Discretionary were the top gainers.

After being closed on Monday on account of Columbus Day, the fixed-income markets were open again on Tuesday. Treasury yields slipped, as traders played catch-up to global markets in snapping up bonds.

The 10-year yield ( US10Y ) was down 13 basis points to 4.65%, while the 2-year yield ( US2Y ) was lower by 12 basis points to 4.96%.

A host of Fed officials took the spotlight on Tuesday. The speakers were kicked off by Atlanta Fed President Raphael Bostic, who at a forum said that the central bank's policy rate was at a sufficiently restrictive level to get inflation down to its 2% goal.

Fed Governor Christopher Waller said that the Fed would " stay on the job " to achieve its goal of reducing inflation. Then, Minneapolis Fed President Neel Kashkari said that the economy seemed to be on track for a soft landing, while noting that rising yields could mean the "Fed has to do less."

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.2%, the S&P 500 is up 0.2% and the Nasdaq is up 0.3%. Crude oil is down 0.6% at more than $85 a barrel. Bitcoin is down 1.3%.

In the world markets, the FTSE 100 is up 0.1% and the DAX is up 0.06%.

The biggest stock movers for the day premarket: Cava Group (NYSE: CAVA ) is up nearly 5% after Morgan Stanley upgraded the fast-casual Mediterranean restaurant chain from equal-weight to overweight, citing confidence in the company's catalysts and near-term expectations. And DaVita (NYSE: DVA ) is down more than 15% after Novo Nordisk ( NVO ) announced it would stop a study early for its diabetes drug Ozempic in the treatment of kidney failure with a positive outcome . NVO is up 2.5%.

On today’s economic calendar, at 8:30am the Producer Price Index. At 2pm the FOMC minutes will be released.

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