Allbirds (BIRD), a shoe company associated with sustainability and eco-friendliness, has struggled in recent years.

After selling its first shoe in 2016, the company quickly gained traction among environmentally conscious consumers for designing comfortable footwear made out of natural materials like wool and eucalyptus.

Allbirds capitalized on its early success, leading to an IPO in late 2021. During the company’s first day of trading, the company’s shares were valued at over $520.

Unfortunately, the company was unable to sustain this positive momentum.

Allbirds’ strategy of rapidly expanding its physical store footprint, expansion into apparel, and intense focus on environmentally conscious consumers weren’t able to fuel the company’s continued growth.

After ending 2022 with nearly $300 million in revenue, the company’s sales began a steady downward trajectory. By 2025, revenues had plummeted to just $153 million—just over half of what the firm delivered during its peak.

By February 2026, Allbirds announced that it was closing all of its retail locations in the U.S. as part of its revamp efforts and renewed focus on e-commerce.

However, this strategic shift was short-lived. On March 30, the company announced that it was exiting the footwear market through the sale of its intellectual property to American Exchange Group (AXNY) for $39 million.

American Exchange Group agreed to acquire the Allbirds brand along with its related assets and liabilities. Upon closing, the firm will integrate the footwear label into a brand portfolio that includes the likes of Aerosoles and Ecko.

As for Allbirds, the sale was just the first step in a broader turnaround strategy: Its transformation from a shoemaker into an AI compute provider.

Earlier this week, the company announced that it would rename itself to NewBird AI and transform into a GPU as a Service and AI-focused cloud solutions company.

The company also revealed that it had entered into a definitive agreement with an unnamed institutional investor to establish a $50 million convertible financing facility, a deal which is expected to close during the second quarter of this year.

The announcement sent Allbirds’ stock to surge by over 500%, firmly putting the company in meme stock territory.

As of now, it remains to be seen how all of this will play out. The sale of the Allbirds brand, the AI-related pivot, and the $50 million convertible financing agreement will have to be approved by shareholders next month.

Moreover, the company has yet to disclose additional funding sources for its latest strategic move, and $50 million won’t be enough for Allbirds to make an impact in the AI space.

CoreWeave (CRWV), a leader in outsourcing computing power, plans to spend up to $35 billion this year alone to expand its capabilities.

Allbirds’ surprising AI turnaround isn’t an entirely novel strategy. Struggling karaoke machine maker The Singing Machine Company (now known as Algorhythm) made headlines earlier this year when it announced its transformation into an AI-first logistics company.

Allbirds can change its name and say it’s shifting to AI. However, like Algorhythm, the stock’s recent ascent shouldn’t be taken seriously by investors. Allbirds is another example of “meme stocks” that have sprouted up over the years.

Sensible investors will understand that Allbirds failed as a shoe retailer, it has no experience in AI, and it should be avoided despite recent hype.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research

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