Allbirds Made The Weirdest Pivot, And Their Stock Is Soaring Now?
Allbirds just pivoted their business away from shoes and the stock has exploded after the announcement. But, no one could have guessed how they managed to achieve that.
The shoe retailer announced that they’re switching to AI, and the Internet is largely confused by the revelation. According to CNBC the company is valued around $4 billion. However they went ahead and sold their intellectual property and other assets about two weeks ago for $39 million. That would be a signal of a flailing company. And it still might! But, that stock number made everybody stop and take notice.
Allbirds is up 400 percent today upon the announcement of their AI pivot. What used to be about $3 a share is now sitting at a whopping $13 a share. Of course, this has led a lot of investors to run to the market to get in on such a hot commodity.
But is that smart? After all, this is a shoe company at its heart. Will people still flock to this brand for AI insights the way they used to for sensible flat sole shoes? The people in charge seem to think so. Their new company is called Newbird AI, and they’re poised to raise up to $50 million in funding.
Allbirds pivots to AI
In a statement, Allbirds argued that the changes will position them better long term. But, you’ll excuse my skepticism.
They wrote, “The Company will initially seek to acquire high-performance, low-latency AI compute hardware and provide access under long-term lease arrangements, meeting customer demand that spot markets and hyperscalers are unable to reliably service.”
Last year, Allbirds teamed with American Exchange Group to dump all of their intellectual property. A lot of people saw that as a red flag when it happened. Now, today their fears were basically confirmed in earnest.
Joe Vernachio was the CEO of the company when that deal to sell off their shoe business was announced. He said, “We are incredibly thankful to our teams for the work they have been doing to fuel our product engine, build awareness of Allbirds and deliver an engaging customer experience.”
“Over the past decade, Allbirds has evolved into a lifestyle footwear brand known for modern design, innovative materials and unparalleled comfort. This next chapter with AXNY builds on the foundational work already completed and sets up the brand to thrive in the years ahead.”
AI Stocks and the sword of Damocles
All of this is extremely worrisome. So much of the stock market in the United States is being undergirded by AI infrastructure. As the technology itself and its economic implications are volatile by nature, there’s a reason to be concerned.
Thinking back on Bitcoin, NFTs, and other such scams from the last half decade. They’ve all risen to prominence through desperation. In effect, the widespread adoption of this tech is fueled by the same impulses in executives at these different firms. Not too long ago, Allbirds seemed like a better long-term bet than other shoe retailers. Now, 6 short years later, all that’s out the window.
(featured image: Allbirds)
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