What’s all new?
Allbirds, once the go-to shoemaker for the financial and tech industries, has now morphed into Newbird AI, and its stock has seen a wild rise around the pivot.
The stock soared, rising 876% during the session. Allbirds stock closed Wednesday’s trading at $16.99, up 582% in one day from Tuesday’s closing price of $2.49.
The sneaker company announced it has signed a deal with an institutional investor for a $50 million convertible loan facility that will be used to purchase “high-performance GPU assets” as part of its transformation to AI computing infrastructure.
In late March, Allbirds announced a deal to sell its shoe business to American Exchange Group, which owns brands such as Aerosoles, Ed Hardy and Mud, for $39 million. William Blair analysts said the offer represented a value of $5.70 per share at the time of the announcement.
The new company cites a “long-term vision to become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.”
The company joins a growing list of companies dating back to the internet boom of the early 2000s that have pivoted to efforts far from their core businesses to win back investors.
In 2017, Long Island Iced Tea announced its transformation to Long Blockchain Corporation. The stock price rose almost 500% on the news. The company was delisted in 2021, and the SEC charged three people associated with the company with insider trading.
Most recently, media company BuzzFeed pivoted to AI in 2023, sparking a massive stock rally. The stock is down nearly 95% from its 2023 high, and reports earlier this year suggested the company was on the brink of bankruptcy.
Allbirds’ statement revolves around the company stepping up to address the growing gap in the supply of critical AI computing power.
“The rise of AI development and deployment is creating an unprecedented structural demand for specialized, high-performance computing that the market is struggling to meet,” the announcement reads.
“NewBird AI is built to fill that gap. We will first acquire high-performance, low-latency AI computing hardware and aim to provide access under long-term lease agreements to meet customer demands that spot markets and hyperscalers cannot reliably service.”
This sudden change in direction comes after Allbirds’ stock valuation has plummeted since going public in 2021. Allbirds’ IPO raised approximately $348 million at a price of $15 per share.
Allbirds shoes were once a favorite of Wall Street traders, Silicon Valley tech workers and even former President Barack Obama.
However, the company, which has focused on sustainability and comfort, has been in the red ever since going public, and its revenue has been declining every quarter since 2022.
Correction: April 15 — A previous version of this article incorrectly stated how much Allbirds was sold for. The diagram has been updated.