Kiwi-founded Allbirds gives wooly shoes the boot for AI – and its shares went bonkers

Shares in New Zealand-founded company Allbirds rallied as much as 800% in a single day, after it announced plans to leave its shoe manufacturing business behind and instead build artificial intelligence (AI) infrastructure.

Marking one of the most remarkable corporate U-turns in recent memory, the San Francisco-based Allbirds, which built its reputation on sustainable wool and canvas footwear but has faltered in recent years, on Wednesday informed investors of its radical new direction.

Allbirds will “pivot its business to AI compute infrastructure”, the business told investors, with the goal of buying and leasing access to powerful GPU chips and providing AI-native cloud solutions.

The business has secured US$50 million (AU$69.7m) in institutional investment to power that transition, and plans to change its name to NewBird AI to reflect its new trajectory.

“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 business said.

“NewBird AI is being built to help close that gap,” it added.

Shares go ballistic

Shares in the NASDAQ-listed business rocketed after the announcement, rising from about US$2.60 (AU$3.62) to a peak of nearly US$24 (AU$33.45) before fluctuating between US$17 (AU$23.70) and $20 (AU$27.88) through Wednesday.

Allbirds’ market cap lifted from about US$21 million (AU$29.27 million) to as high as US$148 million (AU$206.34 million) on the news.

Should the pivot pay off, Allbirds will join the likes of Amazon, Netflix, and Nintendo, which moved from book sales, DVD deliveries, and playing cards, respectively, to profit from new, digital innovation.

The share price uptick reflects the changing fortunes of what was once a rising powerhouse in the footwear world, and the market fervour for projects promising digital shovels in the AI gold rush.

Launched in 2014 by Kiwis Tim Brown and Joey Zwillinger, Allbirds developed a line of simple sneakers, fabricated from wool and other sustainable materials, as an alternative to synthetic footwear.

Its Wool Runner, launched in 2016, became a hit among the hoodie-and-jeans class of Silicon Valley. The business, domiciled in the US, was publicly listed in November 2021 and hit a valuation of US$4 billion (AU$5.57 billion).

But style trends transitioned away from Allbirds’ breezy offerings, and a broader cooling in the sneaker market in the years since saw Allbirds’ share price decline heavily from its post-IPO highs.

At the end of March this year, Allbirds announced the sale of its intellectual property to American Exchange Group, giving the footwear line another chance to soar as its originators pursue a totally new path.

• This article first appeared on SmartCompany. You can read the original here.