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Why Allbirds' stock price rose 435% on Wednesday. Experts say risk remains high
Shares of Allbirds Inc skyrocketed more than 435% on Wednesday after the struggling footwear brand unveiled a dramatic shift in strategy
Shares of Allbirds Inc skyrocketed more than 435% on Wednesday after the struggling footwear brand unveiled a dramatic shift in strategy - pivoting to AI computing infrastructure. The San Francisco-based company said it had secured a $50 million convertible financing facility from an institutional investor. The capital will be used to acquire graphics processing units (GPUs) and build out a new business focused on cloud computing capacity and AI services.
As part of the overhaul, Allbirds plans to rebrand itself as ‘NewBird AI’, signaling a full departure from its footwear business.
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Allbirds' AI pivot
The pivot comes just days before the company was expected to cease operations in its existing form. Allbirds had already taken steps to exit its core business, including selling its footwear assets to American Exchange Group for $39 million in March.
The buyer’s portfolio includes brands such as Aerosoles, marking a clean break from Allbirds’ original identity as a sustainable shoe company.
The company has also been shutting down most of its brick-and-mortar stores in recent months amid weak demand and a shift toward online partnerships.
Experts warn of risks
Despite the sharp rally, analysts remain cautious about the company’s ability to successfully execute such a drastic transition.
“The move exits a structurally lower footwear and apparel model for a higher-value compute business, though execution risk remains high,” Bloomberg Intelligence analyst Poonam Goyal wrote. The company has potential to ‘improve its long-term margin profile if the transition is executed well’.
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Skepticism also extends to whether Allbirds has any competitive edge in the AI space.
"It looks like an attempt to capitalize on the AI movement. I don't see how Allbirds brings anything to the table beyond name recognition," Bruce Winder, an independent retail consultant, told Reuters.
Riding the AI wave
The pivot taps into surging investor enthusiasm for AI-related infrastructure, as companies pour hundreds of billions into data centers and compute capacity.
Allbirds’ shift mirrors similar moves by distressed companies seeking to revive valuations by entering high-growth sectors. In 2024, Core Scientific Inc pivoted from Bitcoin mining to AI infrastructure, while several biotech firms explored digital asset strategies with mixed results.
From $3 billion darling to near collapse
Allbirds’ dramatic reinvention follows a steep decline since its public debut. The company listed on the Nasdaq in 2021 with a valuation of around $3 billion but has since lost roughly 99% of its market value.
As of Tuesday, its market capitalization had fallen to about $22 million. Wednesday’s surge lifted its valuation to approximately $116 million, with shares trading at $13.33.
The stock also ranked among the most actively traded on Fidelity’s platform, indicating strong interest from retail investors.
