AllBirds: From sneakers to AI, can It work?

Allbirds shares surged more than 500% in today’s session, with the price jumping from roughly $2.5 to around $18, after the footwear maker announced it is raising capital and shifting its business direction to focus on AI computing infrastructure.

The San Francisco, based company has so far focused primarily on manufacturing and selling footwear. It is not large by U.S. standards, just yesterday it was worth only about $25 million, but today its market value is already around $150 million.

The company said it will enter into a $50 million convertible financing agreement with an institutional investor and intends to use the proceeds to purchase graphics processing units (GPUs).

Allbirds also plans to change its name to “NewBird AI” and, over time, shift its focus toward offering cloud computing power and AI services, although it did not provide further details on the new strategy.

Allbirds is a company that could genuinely benefit from a business model overhaul, as despite remaining profitable, both revenue and profits have been declining steadily for several quarters. In recent months, Allbirds has closed most of its brick-and-mortar stores due to weak demand and a shift toward online partnerships. Last month, Allbirds announced that it sold its brand and footwear-related assets to American Exchange Group for $39 million.

This move evokes direct, and rather negative, associations with the dot-com bubble, as well as a number of similar initiatives around 2017 and the speculative bubble in the cryptocurrency market. The market appears to see potential in the company, multiplying its valuation.
It remains a matter of time whether this strategy will prove successful in any meaningful way. Watching whether more entities like Allbirds begin to emerge may provide a lot of information about where the economy currently stands.