Shares of footwear company Allbirds skyrocketed by over 580% on Wednesday following the announcement of a radical strategic shift—from producing eco-friendly shoes to entering the artificial intelligence infrastructure sector.
Once celebrated for its comfortable Wool Runners worn by celebrities like Ben Affleck and Barack Obama, the San Francisco-based firm revealed a $50 million deal to transform into an "AI compute infrastructure" business, rebranding as NewBird AI. The company plans to purchase advanced graphic processing units (GPUs) and offer on-demand computing power and cloud services specifically designed for AI applications, citing a significant market gap where demand for computing resources outpaces supply.
"This move will allow us to thrive in the years ahead," said Allbirds CEO Joe Vernachio in a statement.
However, the dramatic stock surge comes with substantial context. Allbirds' market value remains more than 90% lower than its peak after going public in 2021. Founded in 2015 by former footballer Tim Brown and clean-tech entrepreneur Joey Zwillinger, the company expanded globally but consistently struggled to achieve profitability. Its share price had plummeted from over $500 to approximately $2.50 before the AI announcement.
Industry analysts offered mixed perspectives on the pivot. Branding consultant Wei Kan from Conduit Asia described the move as resembling a "liquidation" rather than a strategic shift, utilizing the company's stock market shell to enter an entirely different industry. Retail analyst Hitha Herzog noted the market reaction highlights ongoing "AI mania," suggesting Allbirds has become a "meme stock"—a phenomenon where shares surge due to social media buzz rather than fundamental business performance—given the absence of proven products or earnings from its new AI venture.
"A stock going from $3 to $17 on a press release doesn't restore $4 billion in destroyed value," Kan remarked.
Concurrently, the Allbirds footwear brand will be acquired by fashion conglomerate American Exchange Group in a separate $39 million deal announced in March. This transition marks the end of an era for a brand that initially captured the attention of Silicon Valley tech workers and casual consumers worldwide, but ultimately could not sustain its early momentum in the competitive apparel market.