Allbirds shares jump over 400% on plans to pivot to AI from sneakers

Michael Dehal, senior portfolio manager at Dehal Investment Partners | Raymond James Ltd., joins BNN Bloomberg to discuss the outlook on the markets.

Shares of Allbirds surged more than five-fold on Wednesday after the footwear maker said it was raising capital and pivoting towards AI computing infrastructure.

The ​San Francisco, California-based company said that it would execute a US$50 million convertible financing agreement ‌with an institutional investor and plans to use the proceeds to acquire graphics processing units (GPUs).

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Allbirds also plans to rebrand itself as “NewBird AI” and, over time, shift focus to offering cloud computing ​capacity and AI services, though it did not provide additional details on ​its new strategy.

The overhaul comes amid robust investor enthusiasm ⁠for AI-related stocks and the data-centre infrastructure that supports it, hoping to ​benefit from the hundreds of billions of corporate investment pouring into the ​technology.

“It looks like an attempt to capitalize on the AI movement. I don’t see how Allbirds brings anything to the table beyond name recognition,” said Bruce Winder, ​an independent retail consultant.

Allbirds has been shutting most of its brick-and-mortar ​stores over the last few months owing to muted demand and switch to online ‌partnerships. ⁠Last month, Allbirds said it had sold its brand and footwear assets to American Exchange Group for $39 million.

The stock was last up 435 per cent at $13.33, valuing the company at $116 million, according to LSEG data. Allbirds was also among ​the most active ​orders on Fidelity’s ⁠trading platform on Wednesday, signalling interest from retail traders.

Allbirds surge on pivot from shoes to AI

The move echoes past efforts by small U.S. firms ​that reshaped their business models to tap investor enthusiasm. ​In 2017, ⁠beverage maker Long Island Iced Tea Corp pivoted to blockchain technology under the name Long Blockchain

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Allbirds made its Nasdaq debut in 2021 at a valuation of $3 ⁠billion, but ​shed about 99% of its market value ​as of its last closing price.

Reporting by Purvi ​Agarwal in Bengaluru; additional reporting by Savyata Mishra; Editing by Diti Pujara