Allbirds is a sustainable, eco-friendly shoe brand founded in 2015. On Wednesday, however, the company announced it’ll be pivoting to artificial intelligence — which, ironically, harms the environment in some ways.
The former shoe company will now be known as NewBird AI and will shift its focus to buying GPUs after signing a $50 million agreement with an unnamed investor, according to The Associated Press.
The move sent the company’s stock prices up more than 600% on Wednesday.
A few weeks ago, the company sold its intellectual property and assets to American Exchange Group for $39 million.
Based in San Francisco, the company is in the midst of the ongoing chip war that practically every firm in Silicon Valley is fighting. The business ultimately decided it was better at being a public vehicle for tech than a shoe retailer.
The group will essentially be renting out computing power to tech startups, per CNN Business.
Why the change?
Declining sales, store closures and a plummeting stock all played a role.
“Allbirds has gone from being a high-flyer to a dead parrot,” one analyst said.
Earlier this month, Forbes reported that shares had plunged 99.5% from its November 2021 high of $521, leaving the company with just $21 million of its former $4 billion peak valuation.
According to the company’s news release, the decision was driven by an AI computing demand “that the market is struggling to meet.”
“NewBird AI is being built to help close that gap,” the release later said.
An AI expert, Bill Kleyman, says it seems everyone wants to be an AI company nowadays and that $50 million is relatively cheap to get started, according to The Associated Press.
The transition from selling sneakers to offering AI infrastructure is almost unparalleled.
Analysts regard it as a high-risk move, warning that the company lacks the necessary expertise and capital to compete with well-established cloud industry leaders.
Ending Tuesday with a market cap of $21 million, the company saw its shares skyrocket from $3 to over $17 following Wednesday’s announcement.