By the close of trade on Wednesday, the company added 3x of that sum to its market value in just one trading session. Why? Because AI became a part of it.
Allbirds on Wednesday announced that the company will be making a business pivot to AI computing infrastructure instead of shuttering operations and will rebrand itself as NewBird Inc.
Following the news, the stock, which had closed at $2.49 on Tuesday, with a market capitalisation of just under $22 million, soared nearly 10x within a few minutes, making an intraday high of $24.31, an 876% jump from Tuesday’s closing levels.
The stock, however, cooled off from those levels, ending 30% off the highs, but still ending the session with gains of 582%, adding over $120 million to its market value overnight, despite no connection whatsoever of eco-friendly shoes and AI infrastructure.
Allbirds plans on selling $50 million in debt, convertible to stock, to finance its new business plan, buy computer gear and implement a “long-term vision to become a fully integrated GPU-as-a-service (GPUaaS) and AI native cloud solutions provider.”
“Developments like this are a sign that froth is in the market,” said Matt Maley, the chief market strategist at Miller Tabak + Co., who said it wasn’t surprising, given how stocks have been rallying. “But it’s still something that should give investors some pause.”
A meme-stock ETF owned by Roundhill investments, was one of the buyers in shares of Allbirds at the start of the trading session. The ETF exists to capture such moves in specific. Roundhill’s CEO Dave Mazza said that the spike in retail sentiment, along with a sharp increase in trading volumes and elevated volatility are exactly the signals that the ETF is designed to capture.
Allbirds went public back in 2021 at the heights of the IPO frenzy on Wall Street, as near-zero interest rates had pushed speculative assets higher. At its peak, the stock was valued at $4 billion, compared to a $300 million valuation at the start of trading as a public company.
(With Inputs From Agencies)
