Allbirds rebrands as NewBird AI, stock jumps 400 percent

US sustainable footwear company Allbirds has announced a radical shift in corporate strategy, transitioning from a fashion retailer to an artificial intelligence (AI) compute infrastructure provider. The San Francisco-based firm, which recently divested its brand assets, intends to rename itself NewBird AI as part of a pivot toward the technology sector.

The announcement triggered a significant reaction on the Nasdaq, where shares surged more than five-fold on Wednesday. The stock increased 435 percent to 13.33 dollars, resulting in a market valuation of 116 million dollars. Despite this recent rally, the company has experienced a substantial decline since its 2021 debut, where it reached a valuation of 3 billion dollars before losing approximately 99 percent of its market value.

Divestment of footwear assets and brand legacy

This strategic overhaul follows the company entering into a definitive agreement to sell the Allbirds brand and footwear assets to US-based American Exchange Group. The asset sale, valued at 39 million dollars, marks the end of the firm's tenure as an independent footwear operator.

The company has executed a definitive agreement with an institutional investor for a 50 million dollars convertible financing facility. This capital is earmarked for the acquisition of high-performance graphics processing units (GPUs) to serve the growing demand for AI compute capacity.

Independent retail consultant Bruce Winder told Reuters that the move appears to be an attempt to capitalise on the current AI movement. Winder expressed skepticism regarding the company's competitive advantage in the sector beyond its existing name recognition. The pivot comes as Allbirds has been closing the majority of its brick and mortar stores due to muted consumer demand and a strategic shift toward online partnerships.

NewBird AI aims to address the global shortage of specialised, high-performance compute resources. The long-term objective for NewBird AI is to evolve into a fully integrated neocloud platform.