Allbirds stock soars 876% after ditching shoes for AI venture

The former footwear favorite of Silicon Valley is trading its wool sneakers for graphics processing units in a bid to capture a piece of the booming AI infrastructure market.

Allbirds Inc., the struggling sneaker brand that lost 99% of its market value since its 2021 IPO, saw its stock surge as much as 876% after announcing it will pivot entirely to artificial intelligence, rebranding as NewBird AI and securing $50 million in new financing. The company, once valued at over $4 billion, is abandoning its eco-conscious footwear roots to chase investor enthusiasm in the AI sector.

“It looks like an attempt to capitalize on the AI movement. I don’t see how Allbirds brings anything to the table beyond name recognition,” Bruce Winder, an independent retail consultant, said in response to the news.

The move is funded by a $50 million convertible financing agreement with an unnamed institutional investor, which follows the recent $39 million sale of its brand and footwear assets to American Exchange Group. Allbirds, under its new name, said it will use the proceeds to acquire graphics processing units and build a GPU-as-a-Service (GPUaaS) provider to meet what it calls an “unprecedented structural demand for specialized, high-performance compute.”

The pivot effectively transforms Allbirds from a consumer brand into a shell company aiming to enter the capital-intensive AI infrastructure market. It’s a high-risk maneuver that questions the long-term viability of a firm with no stated expertise in cloud computing or hardware leasing, drawing parallels to speculative corporate rebrands of past technology booms.

From Tech Bro Uniform to AI Hopeful

Allbirds’ rise was fueled by its popularity in the tech and venture capital communities, with its minimalist wool sneakers becoming a ubiquitous part of the Silicon Valley uniform. Despite early success and celebrity investors, the company failed to maintain momentum. Revenue declined in each quarter since 2022, leading to a $20.3 million loss in the third quarter of last year and the closure of its U.S. retail stores.

The company stated its new long-term vision is to become a “fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.” This strategy hinges on acquiring and leasing out the same high-performance Nvidia GPUs that power the current AI boom, a market where supply is tight and dominated by established hyperscale cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud.

“There is demand for AI compute capacity, but quite what expertise the so-called NewBird AI has in the space and how it intends to capture market share remain unclear,” said Neil Saunders, a retail analyst at GlobalData.

Echoes of Bubbles Past

The dramatic rebranding recalls similar pivots by struggling public companies. In 2017, beverage maker Long Island Iced Tea Corp. saw its stock jump nearly 500% after renaming itself Long Blockchain Corp. The company was later delisted by the Nasdaq for failing to file financial reports.

NewBird AI’s announcement also included a plan to shift from its status as an eco-conscious public benefit corporation to a conventional one, stating the new company “would be less focused on the public benefit of environmental conservation.” The entire transition, including the asset sale to American Exchange Group, is contingent on a shareholder vote scheduled for May 18.

For investors, the surge in Allbirds' stock to a valuation over $116 million reflects pure speculation on the AI narrative. The company joins a growing list of firms with tenuous connections to technology that have invoked "AI" to attract capital, a trend that may draw increased regulatory scrutiny.

This article is for informational purposes only and does not constitute investment advice.