Allbirds, the maker of Silicon Valley’s beloved minimalist wool sneakers, announced Wednesday that it’s ditching shoes and focusing on artificial intelligence. The new focus and rebranding to “NewBird AI” sent the company’s stock up 582% as of midday in heavy trading.
The soaring stock price and new direction represent a strange and rapid turnaround for a company that has been in disrepair in recent years. Allbirds stock, once worth $4 billion, has lost 99% of its value since 2021, and earlier this month the company announced plans to sell it to brand management company American Exchange Company for $39 million.
Allbirds’ declaration that it would focus on acquiring graphics processing units to support AI computing stands out as one of the most puzzling takeaways from the AI boom, when many companies were trying to double down on AI to appeal to investors and the market. The long-term viability of that plan is less clear than the immediate effect of turning Allbirds into something like a meme stock, whose value fluctuates wildly throughout the day.
“The increasing development and adoption of AI is creating an unprecedented structural demand for specialized, high-performance computing that the market is struggling to meet,” the company said in a statement. “NewBird AI is built to fill that gap.”
The company has secured $50 million in funding from an anonymous investor for its new AI business, according to a filing with the Securities and Exchange Commission. The filing also states that Allbirds will transition from its status as an environmentally conscious public interest corporation to a traditional corporation, and that the new company will “de-emphasize the public interest of preserving the environment.”
Allbirds, soon to be NewBird AI, did not respond to requests for comment about its planned rebrand and transformation to AI.
The company has long put sustainability at the center of its marketing, helping it win favor with politicians and celebrities such as Leonardo DiCaprio, who invested in the company in 2018 and touted it as the “model of the shoe industry.” Gwyneth Paltrow, Oprah Winfrey, and Barack Obama are among the influencers who have worn or championed the brand.
Despite early success, the brand struggled to maintain momentum and almost fell out of fashion. At the peak of its popularity, Allbirds had dozens of brick-and-mortar stores around the world, but it has faced a significant decline in sales in recent years, posting a $20.3 million loss in the third quarter of last year. Allbirds closed its last brick-and-mortar store in the United States in January.
Allbirds is currently waiting for shareholders to vote next month to approve its acquisition by American Exchange Company. The company said in a statement that the sale will allow Allbirds to “focus its business on AI computing infrastructure with a long-term vision to become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.”
