Allbirds Announces Shift from Footwear to AI
Shares in the shoe brand Allbirds, known for being worn by celebrities such as actor Ben Affleck and former US President Barack Obama, surged on Wednesday following the company's announcement of a strategic pivot from footwear to artificial intelligence (AI).
The San Francisco-based company revealed it has secured a $50 million (£37 million) deal to transition into an "AI compute infrastructure" business and will rebrand itself as NewBird AI.
This announcement triggered a dramatic increase in the company's shares, which rose by more than 580%. Despite this surge, the firm's stock market value remains over 90% below its level at the time of its initial public offering in 2021.
Background and Market Challenges
Allbirds' trainers had gained popularity particularly among technology professionals in Silicon Valley. However, the company has encountered significant challenges in recent years.
NewBird AI plans to acquire advanced graphics processing units (GPUs), which are specialized computer chips essential for powering AI applications, according to a company statement.
The company identified a "gap in the market" where many businesses lack sufficient computing power due to the industry's inability to meet the growing demand.
Its long-term objective is to provide on-demand graphics chips and cloud services specifically designed for AI workloads.
Brand Ownership and Leadership
The Allbirds brand will be retained by the fashion conglomerate American Exchange Group, which owns other brands including Ecko Unltd and Aerosoles, following a $39 million deal announced in March.
Joe Vernachio, chief executive of Allbirds, commented on the strategic shift:
"This move will allow the Wool Runner maker to thrive in the years ahead."
Founded in 2015 by former football player Tim Brown and clean-technology entrepreneur Joey Zwillinger, Allbirds expanded its retail presence with dozens of stores across the US and internationally, including locations in the UK, New Zealand, China, and Singapore. The brand targeted casual joggers, office workers, and yoga enthusiasts.
Financial Performance and Stock Market History
Despite its growth, Allbirds has struggled to achieve profitability since its listing on the Nasdaq stock exchange in New York five years ago.
Its stock price had fallen dramatically from a peak exceeding $500 per share to approximately $2.50 just prior to the announcement of the AI pivot.
