Allbirds (BIRD) stock surged 582.3% on Wednesday after the company announced a major shift into the AI sector. It revealed a $50 million convertible financing deal with an institutional investor to help fund its transition into an AI compute infrastructure company. However, the move has now sparked concern. Following the announcement, William Blair analyst Dylan Carden dropped coverage on BIRD stock. The stock then fell about 25% in after-hours trading.
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For context, Allbirds was a U.S.-based footwear and apparel company known for its comfortable, eco-friendly shoes. The company recently closed a $39 million deal to sell its brand and footwear assets to American Exchange Group. It now plans to rebrand as NewBird AI and shift its focus to offering GPU-as-a-Service. The Allbirds name will still appear on shoes, but the original company will no longer operate that business.
Allbirds’ AI Pivot Raises Big Questions
Allbirds is a struggling shoe company, that is now trying to capitalize on the AI boom, despite having no real experience in a very expensive and competitive industry. The company is essentially betting that new funding alone can help it compete with established players.
Meanwhile, companies focused purely on AI infrastructure have spent years building expertise and generating revenue tied to GPU demand. In contrast, Allbirds has seen its sales drop sharply over the past four years, posting heavy losses. The recent $50 million funding gives it some time, but it could dilute existing shareholders.
Put simply, this move looks like a classic case of a struggling business pivoting to a hot trend in hopes of a turnaround.
William Blair Calls It a ‘Hail Mary’
William Blair analyst Carden says this move looks like a “Hail Mary”, pointing out that the company may even have the option to shut down within 12 months after a key shareholder vote on May 18.
He also added that the stock reaction has been extreme, with the company’s value jumping to around $140 million from roughly $10 million before the news. However, Carden sees “deep uncertainty” around the shift into cloud computing. He further noted that while selling the footwear business could lead to a special dividend, estimates suggest the company’s liquidation value could be as low as $0.02 to $1.83 per share.
Overall, Carden believes the sharp rally isn’t driven by fundamentals, but by a mix of a low number of shares available to trade, momentum-driven buying, and hype.
Allbirds Stock Performance
Year-to-date, BIRD stock has gained over 300%.
