A birdbrained AI pivot

You know how the saying goes: If at first you don’t succeed, stick “AI” at the end of your company name and see what happens.

At least that’s the playbook Allbirds is using. Today, the merino-wool shoemaker that took Silicon Valley millennials by storm is ditching its tech bro customers and pivoting to actual tech itself, turning into a “fully integrated GPU-as-a-Service and AI-native cloud solutions provider,” the company declared. The impressive use of buzzwords comes with a fun new name, too: NewBird AI. Hey, why not?

The perplexing announcement may seem like a desperate attempt to pander to the trend du jour, but it was still enough to woo the retail crowd: Shares jumped an eye-popping 582.33% today.

Zoom out: Today’s news capped off a steep fall from grace for Allbirds. The company clinched a $4 billion valuation during its first day of trading in 2021, but Allbirds grew too fast, and its trendy sneakers weren’t selling enough to make the company as profitable as investors hoped. Shares plummeted 99.6% between November 2021 and late last week.

That’s why Allbirds sold its shoe business for $39 million to retail conglomerate American Exchange Group back in March (which will keep selling the shoes, btw). Allbirds was left a publicly traded shell of its former self, which is now being stuffed with a $50 million convertible financing facility from an unidentified institutional investor to fund the new GPU venture.

Old bird, NewBird

Allbirds is the latest member of the club of companies that once had an actual business, but ditched it for a flashy new trend after things started to go south.

Remember Long Island Iced Tea? They rebranded to “Long Blockchain” (doesn’t really have the same ring to it) back in 2017. While the stock popped after the announcement, it was delisted a year later. More recently, a little-known karaoke company called Algorhythm Holdings sent logistics stocks spiraling after announcing it was pivoting into an AI platform for trucking companies.

Meanwhile, some companies are tapping into AI demand as a cash generator to support their real business. Just look at Boom Supersonic, which is building high-speed airplanes—but as a side hustle, sells its gas turbines to AI companies that need more data center power.

It’s too early to tell which type of company Allbirds will turn out to be—and if you’re wondering WTF is Allbirds going to do in the world of “high-performance GPU assets,” you’re not the only one. But the hype is emblematic of how much blind enthusiasm there is in the market about all things AI, and how retail traders have become a force for Wall Street to reckon with.—LB