Shares of Allbirds surged 600% after the footwear company announced it was pivoting towards AI computing infrastructure.
At its IPO in November 2021, Allbirds was valued as a $4B shoe company but was recently sold for $39M. Allbirds shoes will continue to exist, but the brand, intellectual property, and inventory were sold to American Exchange Group on March 30. Left behind was a stock ticker, shareholders, and a stock market listing, allowing Allbirds’ CEO Joe Vernachio to effectively start a new public company, bypassing the traditional process of raising capital and going public through an IPO.
Traders buying shares today are no longer buying a shoe company but a newly formed AI venture which is built on the remnants of a failed retail brand. At market open, the stock was $4.40, hitting an intra-day high of $24.31 per share. The stock has since pulled back and is currently hovering under $20 a share.
Allbirds, which will be renamed “NewBird AI,” secured $50 million to build the new AI company in a convertible financing facility allowing the investor to convert the debt into equity if desirable. The company states it will use the $50 million to purchase GPUs and rent them out to companies in need of computing power, positioning itself as a player in the AI cloud infrastructure market. If successful, Allbirds would ultimately be competing with dominant cloud providers like Amazon, Microsoft, and Google.
The pivot is contingent on shareholder approval at a special meeting scheduled for May 18. If approved, and once the financing is completed, the company will move into the execution phase of its AI strategy.
The brand’s announcement shows the market’s appetite for companies tied to artificial intelligence, with it valuing the company tens of millions of dollars higher before the company has earned a single dollar from its new venture. Some see this enthusiasm as evidence of an emerging AI bubble driven more by hype than fundamentals.
Michael Burry, the investor famous for predicting the housing market crash in 2008, warns the AI boom is a bubble. “The government will put all the stops to save the AI bubble to save the market to save the economy,” he said. “The problem is too big to save.”
Others disagree. Amazon CEO Andy Jassy has called AI a “once-in-a-lifetime opportunity,” while BlackRock CEO Larry Fink says he does “not believe we have a bubble at all.” Supporters argue that, unlike the dot-com era, many AI companies today are already profitable and generating cash.
Critics, however, contend that the technology has yet to produce value commensurate with the hype.
