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Allbirds rebrands as AI compute firm, shares skyrocket
Shares of the sustainable shoe brand Allbirds surged over 580% on Wednesday after the company revealed plans to transition into an artificial intelligence (AI) infrastructure business, rebranding as NewBird AI.
Deal details and market reaction
San Francisco-based Allbirds announced a $50 million agreement to shift its focus to AI compute infrastructure, a move that sent its stock soaring despite its market value remaining more than 90% below its 2021 initial public offering (IPO) levels.
The company stated it will purchase advanced graphic processing units (GPUs), the computer chips essential for powering AI applications, citing a "gap in the market" due to high demand for computing power.
NewBird AI aims to provide on-demand GPUs and cloud services tailored for AI workloads, though the company has yet to demonstrate a functional product or revenue in this sector.
Brand future and industry skepticism
The Allbirds footwear brand will be acquired by American Exchange Group, a fashion conglomerate that owns labels such as Ecko Unltd and Aerosoles, under a $39 million deal finalized in March.
Allbirds CEO Joe Vernachio described the pivot as a strategic move to ensure the company's long-term viability, stating it will allow the brand to "thrive in the years ahead."
"This feels more like a liquidation than a pivot. They're essentially using the stock market shell of their shoe business to enter an entirely unrelated industry."
Wei Kan, Branding Consultant, Conduit Asia
Retail analyst Hitha Herzog echoed skepticism, calling the stock surge a result of "AI mania" and labeling Allbirds a "meme stock," a term popularized during the COVID-19 pandemic when retail investor enthusiasm drove volatile price swings.
Background and financial struggles
Founded in 2015 by former professional footballer Tim Brown and clean-technology entrepreneur Joey Zwillinger, Allbirds gained popularity among tech workers in Silicon Valley and casual consumers worldwide. The brand expanded rapidly, opening stores across the U.S., U.K., New Zealand, China, and Singapore.
Despite its cultural appeal-celebrities like Ben Affleck and former U.S. President Barack Obama were spotted wearing its shoes-Allbirds has failed to achieve profitability since its 2021 Nasdaq debut. Its stock price plummeted from over $500 per share at its peak to approximately $2.50 before Wednesday's announcement.
Branding consultant Wei Kan noted that while the pivot provides NewBird AI with a tradable shell, the stock's jump from $3 to $17 "doesn't restore $4 billion in destroyed value."
What's next for NewBird AI
The company has not yet released details on its AI infrastructure rollout timeline or customer acquisition strategy. Analysts warn that investor enthusiasm may outpace tangible progress in the highly competitive AI sector.
