Allbirds shares soar after pivot from shoes to AI

The stock of Allbirds, a shoe company previously worn by celebrities such as actor Ben Affleck and former U.S. President Barack Obama, experienced a significant rise on Wednesday following its decision to shift focus from footwear to artificial intelligence. Based in San Francisco, the firm revealed a $50 million deal to transition into an “AI compute infrastructure” business, marking a name change to NewBird AI.

The announcement drove the company’s stock up by over 580%, though its overall market value remains more than 90% below its 2021 debut. Allbirds’ sneakers gained traction among tech professionals in Silicon Valley, but the company encountered mounting difficulties in recent years. NewBird AI plans to acquire advanced graphic processing units—chips critical for AI operations—and will introduce on-demand graphics solutions and cloud services tailored for AI applications.

The Pivot and Market Reaction

Shares surged sharply after the pivot, yet the stock’s value has dropped significantly since its 2021 listing. The company’s stock fell from over $500 per share to around $2.50 just before the AI strategy was unveiled. This dramatic decline underscores the challenges Allbirds faced in maintaining profitability. The name change and new business model provide a framework for the company to trade on the stock market, though analysts question whether this revival can restore its lost value.

“The move feels more like a liquidation than a strategic pivot,” said Wei Kan, a branding consultant from Conduit Asia. “They’re using the stock market shell of their shoe brand to enter an unrelated sector.”

Analyst Perspectives on the Move

Hitha Herzog, a retail analyst, described the enthusiasm for Allbirds as “clearly a meme stock,” attributing it to the company’s mention of AI in the announcement. The meme stock trend, which gained momentum during the pandemic, saw shares of certain companies skyrocket due to retail investors’ social media-driven interest. Herzog pointed out the presence of “AI mania” despite the lack of concrete product or earnings proof for NewBird AI’s new direction.

Allbirds was established in 2015 by former football player Tim Brown and clean-tech entrepreneur Joey Zwillinger. The brand expanded to numerous locations globally, including the UK, New Zealand, China, and Singapore, catering to casual joggers, office workers, and yoga enthusiasts. However, the company has struggled to achieve profitability since its Nasdaq listing five years ago. The pivot offers a fresh opportunity, but its long-term success remains uncertain.