Allbirds, the once-popular shoe brand, rebranded as Smartbird a few months ago and repositioned itself as an AI company. The move sent its stock above $20 overnight, a gain of more than 800%.
That rally did not last. Protos reported that Smartbird’s share price has since fallen back to the exact same level it traded at before the company became an AI play, in a reversal the outlet said is darkly reminiscent of Long Blockchain Company. The outlook, it added, remains bleak.
From shoe brand to AI label
According to the report, Allbirds had already been in a prolonged slide after its IPO, with the stock first weakening gradually and then falling more sharply. News of the AI pivot briefly changed that trajectory, but only for a moment.
The article’s author wrote that the product itself was not the problem, describing a personal pair of Allbirds bought during a trip to Tokyo. A saleswoman pitched the shoes as being made from high-quality, sustainable materials, then closed with the line: 「You can throw them in the washing machine and they will look just like new.」 The author said the shoes were comfortable, had heel and arch support, and still looked new after washing.
Even so, the author added that this purchase came late in the brand’s life cycle, more like arriving for a brief encore before the show ended.
The business decline after IPO
Protos said Allbirds enjoyed a short period of explosive sales growth years ago, enough for management to take the company public. After that, demand faded. Revenue fell sharply, the stock withered, and the company needed a new direction.
Before going public, Allbirds had become a favorite among Silicon Valley elites, politicians, and sections of the media, largely because of its use of sustainable materials. The brand was generating hundreds of millions of dollars in annual revenue and, at the time, was treated as a fashion icon alongside names such as Lululemon, with a focus on casual and comfortable clothing. The report also referenced a 2018 CNBC YouTube video that discussed Allbirds’ rise, sales, and private equity backing in almost entirely positive terms.
Fashion turned quickly. Allbirds went public at the peak of consumer interest in the brand, and the shares then fell almost continuously from day one. The company stayed committed to sustainable materials, shoes, and a direct-to-customer sales model. Protos said bluntly that an inability to change killed Allbirds.
On the numbers, the fall was steep. Allbirds was valued at $4 billion on IPO day, and within two years it had lost more than 85% of that valuation.
Sale of footwear IP for $39 million
This year, Allbirds sold its footwear intellectual property and merchandise business to American Exchange Group for $39 million, a sharp comedown from its earlier status.
The report said American Exchange Group generally acquires struggling apparel companies and then licenses and distributes them after purchase. Its portfolio includes bebe, Rocawear, Ed Hardy, and Rampage.
Protos said the shoes will likely no longer appear in global retail stores, though they are still available online. It also said it remains unclear whether quality will stay the same or whether American Exchange Group will need to cut costs significantly to restore profitability.
Why pivot to AI
Protos linked the shift in part to the company’s Silicon Valley roots. Allbirds was backed early by major tech names of the period as well as private equity funds. With the US in an AI boom, the report said it makes sense that a company still publicly listed after years of weak price action and poor returns would try to catch the biggest hype cycle available before it is left behind.
For now, though, Smartbird does not appear to have an operating AI business. The report put it bluntly: nothing yet. Whether it will launch something tied to artificial intelligence soon remains unclear in the article.
Quarterly filing flags execution risk
The company’s latest quarterly financial documents laid out a stark set of risks. Among them: it is 「fac(ing) intense competition from larger, more experienced and significantly better-capitalized companies」 and 「[Smartbird] may be unable to implement [an AI Infrastructure Business] successfully or at all.」
Protos wrote that the former fashion success story is now searching for a second miracle, this time in AI infrastructure. Whether it can find one is still an open question.
Market performance since the pivot has been ugly. After reaching a peak of just over $24 on April 15, Smartbird has lost 90% of its value and now trades around $2.50.
In August, the CEO published a lengthy and upbeat letter to shareholders, but the report said it included no specifics and no timeline. The company appeared to be targeting customers across nearly every industry and business size.
Old slogan, new slogan
Allbirds once used the line 「Create better things in a better way.」 Smartbird’s new slogan is 「Built for AI, managed for you.」 Protos described the newer line as more ambiguous and hardly optimistic.