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Tech bro sneaker company Allbirds made a huge splash yesterday when it announced a baffling pivot to AI infrastructure — news that was met with a mix of incredulity and ridicule.
The company’s blindsiding metamorphosis into what it’s calling “NewBird AI” had investors leaping from their office chairs, sending shares surging by over 700 percent on Wednesday.
That’s despite Allbirds’ core business being at death’s door. In its final throes, the company sold off its intellectual property and other assets for a measly $39 million mere weeks ago, leaving its once lofty $4 billion market cap five years ago long behind.
But don’t break out the champagne quite yet. The rally subsequently came to a “screeching halt,” as Bloomberg put it, with shares sinking a dismal 35 percent on Thursday.
In other words, possibly ketamine-crazed Wall Street bros realized the morning after that a struggling shoe company may not be able to prop up a trillion-dollar industry with its promises of buying up impossible-to-get AI chips.
The bizarre stock market performance perfectly highlighted persistent concerns over an AI bubble, with business fundamentals taking a backseat as investors bet big on a bright and profitable future that may — or may not — still be years away.
Some investors were baffled why an ailing shoe brand got so much attention in the first place.
“This has the feel of a meme stock, where emotions take over and logic and reason get thrown out the window,” 50 Park Investments chief executive Adam Sarhan told Bloomberg. “That the market actually rewarded the stock yesterday when it doesn’t seem to have any kind of actual AI edge tells me that froth, specifically AI froth, is picking up.”
“Between the risk of a huge reversal or a short squeeze, I can’t see any reason why you’d want to play this,” Sarhan added. (A short squeeze is a rapid increase in the price of a stock primarily being driven by an excess of short sellers buying back their shares to cover their losses, not any underlying business fundamentals.)
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