The shares of footwear company Allbirds fell nearly 30% on Thursday a day after it posted a whopping 582% surge in just one session after it announced plans to pivot its business to an AI compute infrastructure company from a shoe-maker. This move to rebrand to 'NewBird AI' stunned both the Wall Street and the retail industry, however such pivots haven't been promising in the past.
The stock was trading at $12.10 in early trade, down 28.79% on Thursday.
There are multiple examples of a comparable pivot that have not worked for the company or the investors. Media company BuzzFeed moved to AI using the technology to generate content and launch AI-powered social apps, but this had little success. The shares are down nearly 100% since its listing in 2021.
Another recent example is Algorhytm Holdings. Similar to Allbirds it moved its focus to AI innovations in logistic industry, which helped the stocks to more than triple in February but since then the shares have fallen 70%.
Allbird's AI Bubble
In a statement released on its investor relations page, the company said it had secured a deal to raise up to $50 million in funding, which is expected to close in the second quarter of 2026.
“The company will initially seek to acquire high-performance, low-latency AI compute hardware and provide access under long-term lease arrangements, meeting customer demand that spot markets and hyperscalers are unable to reliably service,” it said.
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The move comes weeks after Allbirds agreed to sell its intellectual property and other assets for $39 million to American Exchange Group, which is expected to continue operating the Allbirds footwear label.
The funding raised for NewBird AI is expected to be used to buy high-performance GPU hardware for long-term leasing arrangements aimed at enterprises and AI developers facing shortages in compute capacity.
The company's transformation marks a remarkable turnaround for a business that, until recently, had been preparing to wind down following years of falling sales and intensifying competition in the footwear market.
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