IPO Stock Of The Week Roundup: Atour Hits Buy Point; Birkenstock, Reddit Tumble

In the ever-evolving landscape of Initial Public Offerings (IPOs), some companies soar while others stumble. This week, we witnessed a mix of fortunes for Atour Lifestyle, Birkenstock, and Reddit. Let's dive into the details and analyze the factors contributing to their respective performances.



Atour Lifestyle, a China-based hotel chain, hit a buy point this week, with its stock soaring nearly sevenfold from its IPO price in March 2024. The company's strong performance can be attributed to several factors:

1. Growth in daily active users and revenue: Atour Lifestyle reported a 40% increase in user base between 2021 and 2023, and a 64% year-over-year increase in sales in the second quarter of 2024. This growth in users and revenue contributed to the company's strong performance (Source: Investopedia).
2. Successful partnerships and collaborations: Atour Lifestyle has formed strategic partnerships, such as the one with Google, which has helped drive growth and increase the company's value (Source: CNN).
3. Focus on AI and data licensing: Atour Lifestyle's plans to license its data to AI firms, such as Google, have attracted investors and contributed to the company's growth potential (Source: CNN).
4. Timing of the IPO: Atour Lifestyle went public at a time when the IPO market was trending higher, with 23 IPOs priced so far in 2025, a 15% increase over last year (Source: CNN).



Birkenstock, the iconic German footwear brand, experienced a disappointing IPO this week, with its shares falling 13% at the time of its debut. Several factors contributed to Birkenstock's dismal showing:

1. Overvaluation: Birkenstock set its offer price at $46 per share, giving it a valuation of $8.6 billion, which was much higher than the public's valuation. This discrepancy led to a lack of investor confidence in the company's stock (Source: MarketWatch).
2. Lack of investor confidence: Investors were hesitant to buy Birkenstock's stock due to the lingering effects of the COVID-19 pandemic and the poor performance of other publicly traded footwear companies (Source: MarketWatch).
3. CEO's lack of experience: Birkenstock CEO Oliver Reichert did not have any prior experience leading a publicly traded company, which may have damaged investor confidence in the company's stock (Source: MarketWatch).



Reddit, the popular social media platform, also experienced a decline in its IPO this week. The company's stock fell despite being the first social media company to go public in years. Several factors contributed to Reddit's disappointing performance:

1. Never turning a profit: Reddit has never turned a profit, and the company admitted that it may not be able to achieve or maintain profitability in the future. This lack of profitability raised concerns among investors (Source: CNN).
2. Giving loyal users a chance to buy IPO shares: Reddit's decision to give loyal users a chance to buy IPO shares was seen as a risky move, as these users could cause volatility in the share price right out of the gate if they quickly sold the stock (Source: CNN).
3. Rough IPO market: The IPO market has been challenging in recent years, with successful IPOs typically begetting other successful listings. Companies that have gone public have underperformed the S&P 500 by about two percentage points (Source: CNN).



In conclusion, Atour Lifestyle's strong performance and ability to hit a buy point can be attributed to its growth in users and revenue, successful partnerships, focus on AI and data licensing, and the timing of its IPO. In contrast, Birkenstock and Reddit experienced declines in their IPOs due to overvaluation, lack of investor confidence, CEO's lack of experience, never turning a profit, giving loyal users a chance to buy IPO shares, and the challenging IPO market. By understanding these factors, investors can make more informed decisions when considering IPOs in the future.