What happened

Shoemaker Allbirds (BIRD -0.54%) took flight earlier this month, its IPO scoring a 90% gain on its first day of trading. Although the company wasn't able to hold on to all of those gains (it's actually declined about 16% over the two weeks since it first went public), the stock remains barely above its IPO price today.  

Just only just barely. Today, all of a sudden, Allbirds stock fell out of the nest -- down 9.9% as of 3:35 p.m. ET.

Three wide eyed baby birds in a nest looking alarmed

Image source: Getty Images.

So what

What knocked Allbirds lower? In a word: Berenberg.

This morning, the investment banker initiated coverage of Allbirds stock with a "hold" rating and a price target of only $23, indicating that Berenberg isn't at all confident the stock will regain its post-IPO highs.

Allbirds brand is differentiated from its competitors because of its "comfort and sustainability," admits Berenberg, and the company probably has "several years of strong growth" ahead of it. Nevertheless, at a valuation of 12.9 times estimated sales through the end of this year, "risk/reward [is] relatively balanced" at current prices, says the analyst in a note covered by StreetInsider.com today.

Now what

In fact, I'd even argue that that's an optimistic assessment. On one hand, yes, Allbirds is a growing company. Still, sales growth was less than 27% last year.

Is that an impressive number? Sure it is. I'm just not sure it's impressive enough to justify a valuation of nearly 13 times sales on the stock, especially not when the company is unprofitable, burning cash -- and projected by analysts to continue losing money for at least the next two years. In a highly competitive market like shoes, the chances that competitors will figure out whatever it is that Allbirds is doing right, and imitate it and duplicate it and outcompete it, seem far too significant to justify paying this much of a premium for Allbirds stock.

Today, it seems a lot of investors are feeling similarly.