Allbirds Inc.: Is it a meme stock or a promising AI pivot?

Allbirds, Inc. (Nasdaq: BIRD) is one of the latest stocks to rally after announcing an AI fleet of GPUs. The company is also a test of the AI pivot narrative and its sustainability. 

Allbirds, Inc. (Nasdaq: BIRD) is trading at a one-month high after a near-vertical rally. The stock spiked to $21.95 in the past week, later retreating to $16.99. 

All it took for Allbirds to rally after three years of stagnant trading was the announcement of an AI facility. The company was immediately in the spotlight, in a narrative arc similar to Rivian (Nasdaq: RIVN). Yet the pivot for Allbirds is even more dramatic, given it started out as a sustainable shoe company, catering to the millennial aesthetic and dedicated to natural materials. 

Now, Allbirds has joined the list of AI data center and GPU fleet entities, competing with the recent pivot of major Bitcoin mining companies. The company has agreed to sell all its shoe brands and assets to American Exchange Group, a private company. 

Is the Allbirds rally sustainable?

The Allbirds rally is only a few days old, but BIRD may be gaining meme status. Despite the brand’s influence, the BIRD stocks will have to fight for a second chance after their 2021 IPO at $4B valuation. 

The company achieved quarterly revenues of over $30M on average, with net losses of $15M to $20M over the past three reported quarters. Allbirds was still moving within expectations but lacked the initial hype as a cult brand. 

The AI announcement was the factor that boosted BIRD trading by 875 times its usual daily volumes. The company announced a $50M investment in GPUs, and the actual facility is expected to launch later this year. 

Allbirds has set out a bid to become a long-term AI company, complete with a rebranding to NewBird AI. The $50M investment comes from a recently negotiated financing facility, which will be finalized in Q2. 

As the company has shown commitment to growing its AI compute influence, BIRD may benefit from the growing activity and general interest. In the short term, however, BIRD has behaved as a meme stock. 

Allbirds sparks talk of AI peak 

Until recently, the AI pivot narrative was the main offramp for crypto mining companies. Giants like Riot Platforms and Mara Holdings used their available electricity contracts and experience with mining farms to upgrade to AI compute centers. 

The shift from a shoe company to AI compute provider is seen as an attempt to revive a company’s relevance and stock price. 

Currently, BIRD is also facing significant short open interest, at over 18% of the float and less than half a day of supply to cover. BIRD may extend its rally on a short squeeze, but may still face headwinds as the AI narrative is not enough to support the stock, and the actual data center construction is months away.