Allbirds, the eco-friendly shoe company, announced a dramatic shift from footwear to artificial intelligence infrastructure on Wednesday. The San Francisco-based firm secured a $50 million agreement with an institutional investor to fund this pivot and will rebrand as NewBird AI.
Key Takeaways
Allbirds announced it is transitioning from footwear to AI compute infrastructure, securing $50 million in funding and changing its name to NewBird AI. The stock surged over 600%, though skepticism remains about the viability of this pivot.
- Allbirds secures $50m for AI pivot
- Stock soars 600% following announcement
- Company will sell footwear assets to American Exchange Group
- Analysts express doubts about market expertise
The company's stock surged over 600%, jumping from under $3 to more than $17, reminiscent of the dot-com boom. However, despite this surge, its market value remains over 90% lower than its initial listing in 2021. Allbirds will sell its footwear assets to American Exchange Group, which owns over 30 brands across fashion and personal care.
The pivot comes amid declining sales and financial losses for Allbirds. The company declared a $20.3 million loss in the third quarter of last year. Despite initial success and high-profile endorsements from celebrities like Leonardo DiCaprio, Gwyneth Paltrow, Oprah Winfrey, and Barack Obama, Allbirds struggled to maintain momentum.
The announcement has sparked skepticism among analysts. Neil Saunders from GlobalData told CBS News that while there is demand for AI compute capacity, it's unclear what expertise NewBird AI has and how it intends to capture market share. Bill Kleyman, an AI infrastructure expert, stated that the pivot is a 'strange' move given Allbirds' background in footwear.
Following the announcement, social media firm Myseum also rebranded itself as Myseum.AI, highlighting investor mania for artificial intelligence stocks. On Thursday, Allbirds' stock dropped 29.5%, underscoring the volatile nature of its recent surge. The pivot echoes past efforts by small U.S. firms reshaping their business models to tap into investor enthusiasm.
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