Companies that change course include Allbirds. The San Francisco shoemaker that once transformed merino wool sneakers into a Silicon Valley uniform—the kind worn by tech founders on stage at TechCrunch Disrupt, venture capitalists at Blue Bottle, and Barack Obama on a peaceful morning stroll that momentarily brought down the internet—has decided it would prefer to be in the GPU industry. The company announced last month that it was selling its footwear brand and changing its name to NewBird AI, a “AI compute infrastructure” company that plans to purchase and rent graphics processing units. When a struggling small-cap incorporates “AI” into its identity, the market’s response was essentially what you would anticipate. In just a few days, the stock rose 580%. Then it started to crumble almost immediately.
It’s difficult to ignore how much this resembles other bizarre periods in market history, such as the dot-com era, when businesses added “.com” to their names and saw their share prices double, or the brief blockchain craze of 2017, when an iced tea manufacturer changed its name to Long Blockchain Corp. There is rhyme in the pattern. Seldom do the mechanics alter. The original idea behind the company’s abandonment is what makes this case unique. Allbirds was more than just a shoe company. With carbon labels printed on every box, B Corp certification, and sustainability woven into every marketing line, it was a kind of cultural artifact. It seems like a certain Silicon Valley dream came to an end when the company sold that identity to American Exchange Group for about $39 million. The one in which public markets saw a smooth transition to conscious consumerism.
Of course it didn’t. Since the 2021 IPO, the stock has dropped by about 99%. Sales in the most recent quarter came in at $22.32 million, down 22.4% from the previous year. Revenue continues to decline. The remaining information can be found in the 52-week range: $2.15 at the bottom and $24.31 at the top, both of which were reached within weeks of one another. Businesses typically don’t exhibit that level of volatility. A casino floor is described in it.
On Wall Street, some of the more pessimistic voices have already expressed their opinions. Never one to hold back, Jim Cramer called the situation “ridiculous” and suggested that the SEC should investigate. This is noteworthy coming from the man who once supported pet rocks. Naturally, retail traders were unconcerned. In part because Allbirds had a high short interest prior to the announcement and the circumstances for a squeeze were practically textbook, they still poured in. The squeeze arrived. It was successful. With bid-ask spreads that resemble those of a thinly traded biotech rather than a former unicorn, the stock is currently hovering and restless below $6.
This is what happens when a brand outlives its moment, according to longtime observers. Before the term “quiet luxury” was used in marketing, Allbirds captured the exact wave of mid-2010s minimalism. However, the shoe industry is harsh. Margins shrink. Returns accumulate. Newer rivals like On Running and Hoka steal your lunch by being either more stylish or more technical, or occasionally both. When direct-to-consumer (DTC) was magical, Allbirds tried it; when it wasn’t, they retreated. Nothing was quite effective.
The pivot itself poses issues that have not been satisfactorily addressed. The company employs about 362 people, none of whom were likely hired to oversee GPU clusters, and has a market capitalization of just $50 million. Purchasing GPUs costs money. A lot of it. The $50 million convertible financing facility that Allbirds announced sounds significant, but keep in mind that CoreWeave alone has spent billions on infrastructure. In a market already crowded with hyperscalers, neoclouds, and well-funded specialists, it’s still unclear if NewBird AI will have anything approaching a true moat.
Investors appear to think that the AI pivot’s brand value is more valuable than the actual operating business, or at least a portion of them do. Given how dire the footwear numbers had gotten, there might be some validity to that. However, the story of brand value without execution ends the same way that most “AI pivot” stories do. As you watch this develop, it seems like a business is searching for any story that the market will still accept. That occasionally works for a while. After all, the new owners will continue to own the wool sneakers. The part that is still undergoing change is the ticker.
