Allbirds’ declining brand ditches shoemaking for AI, watches stock soar to over 700%

Struggling shoe maker Allbirds stunned Wall Street on Wednesday. According to CNBC, the company known for wool sneakers announced it is selling its footwear assets. Shares rocketed more than 700% in a single day.

Once valued at billions, Allbirds faced sharp sales drops. Revenue fell nearly 50% from $298 million in 2022 to $152 million by 2025, CNBC reported. The firm reportedly closed all U.S. full-price stores in February.

Now, it aims to become an AI player. The eco-friendly brand will rebrand as NewBird AI, CBS News confirmed. It plans to focus on AI compute infrastructure.

Bold bet on AI boom

CNBC reported that Allbirds struck a $39 million deal last month with American Exchange Group. The buyer owns over 30 brands in fashion and footwear. It will keep selling products under the Allbirds name.

A new $50 million investor pact fuels the shift, CBS News says. Funds will buy high-performance AI hardware for long-term leases. “The rise of AI development and adoption has created unprecedented structural demand for specialized, high-performance compute that the market is struggling to meet,” the company said in a press release.

Shares leaped $14.86, or 597%, to $17.35, CBS News notes. The stock was under $3 Tuesday. The surge recalled dot-com era hype.

GlobalData analyst Neil Saunders weighed in on the company using a former business to transform itself. "That is not a bad thing as it could provide a new lease of life for investors and some employees," he told CBS News in an email.

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Yet doubts linger. "There is demand for AI compute capacity, but quite what expertise the so-called NewBird AI has in the space and how it intends to capture market share remain unclear," Saunders added, according to CBS News.

Founded in 2015 by Tim Brown and Joey Zwillinger, Allbirds rode a wave of sustainability hype, CNBC confirmed. Its merino wool shoes won over tech fans. But growth stalled as rivals surged and costs climbed.

The pivot taps AI's hot streak. Nvidia's rise shows the potential riches. Still, some see echoes of past bubbles in bitcoin or blockchain rushes.