SAN FRANCISCO – Days before permanently shutting down, Allbirds, the maker of wool sneakers that was once worth more than US$4 billion (S$5.08 billion) in its heyday, announced a new business plan: AI computing infrastructure.
And in the stock market, you have a knee-jerk reaction to everything related to that. artificial intelligenceThat’s exactly what happened, with Allbirds stock up 582 percent by the end of the April trading day. 15.
The reaction highlighted the intensity of the speculative frenzy surrounding AI, prompting a rush of would-be winners and a panicked exit from any industry at risk of being overwhelmed by competitive threats.
Allbirds, which will be renamed NewBird AI, is not the first troubled company to try to revive itself with a hot new product.
Name changes like this were common during the dot-com bubble. Long Island Iced Tea rebranded itself to Long Blockchain at the beginning of the cryptocurrency boom.
Bitcoin miners are currently powered by AI. And in February, a small former karaoke company promoted AI tools for trucking companies, sending its stock soaring and causing a sharp selloff across the logistics industry.
“This kind of development is a sign that there’s a bubble in the market,” said Matt Maley, chief market strategist at Miller Tabak & Co., which isn’t surprising given the way stocks have been rising. “But that still needs to give investors pause.”
But investors tend to abandon such caution and bet that other stocks will continue to buy, riding out even the most unexplained spikes in stock prices. That’s what’s been driving the meme stock trend that has flared up intermittently in the corners of the market since the pandemic.
Roundhill Investments owns Memestock Exchange Traded Fund (ETF) Exchange-traded funds (ETFs) deployed to capture these movements were among the buyers of Allbirds stock at the start of the trading day.
“The shoe company’s rebranding as an AI computing infrastructure business is the kind of narrative shift that will spark enthusiasm among retailers,” said Round Hill CEO Dave Mazza.
“The spike in retail sentiment, coupled with a sharp increase in trading volume and increased volatility led by BIRD following the pivot to AI, are exactly the signals the MEME ETF was designed to capture in real time.”
Allbirds said it plans to sell up to US$50 million in debt, convertible into equity, to finance its new business plan.
The company said it will use the funds to purchase computing equipment and realize its “long-term vision to become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.”
The company did not respond to requests for comment.
Allbirds had previously agreed to sell all of its assets and intellectual property to American Exchange Group for approximately US$39 million.
Because the initial public offering process is difficult, failed public companies sometimes use old stock listings to bring new concepts and companies directly to the market.
“Listing is an asset,” said Jay Ritter, a finance professor at the University of Florida.
“We’ve seen reverse mergers over the years, and most of them had kind of a negative connotation given that most of the companies that went public through reverse mergers were low-quality companies and public market investors weren’t doing very well.”
Despite the fact that there is no obvious overlap between shoemaking and cutting-edge computer science, Allbirds has taken another leap forward. The company previously captured the business zeitgeist with its eco-friendly shoes, which were a Silicon Valley favorite.
Allbirds debuted on the stock market in 2021, when near-zero interest rates were boosting speculative stocks of all kinds, but the company’s stock price has only fallen every year since then. by April 14the market value was approximately US$22 million.
The sharp rise in stock prices has recovered some of the lost ground. When the market closed in April, the stock price was close to US$150 million. 15. bloomberg
