Allbirds Does Some Sole Searching

If you thought Allbirds were trendy when they made shoes, prepare yourself.

Allbirds has stopped making its signature product and pivoted straight into a technology driving the zeitgeist. With its market cap having fallen from more than $4 billion to somewhere in the $20 million range, last month Allbirds sold its shoe business and rechristened itself NewBird AI Not content to merely provide footwear to the Silicon Valley set, the company now wants to supply them with computing power. In the company’s words, it is “pivot[ing] its business to AI compute infrastructure, with a long-term vision to become a fully integrated GPU-as-a-service (GPUaaS) and AI-native cloud solutions provider.”

Some might question such a drastic change. Notably, Allbirds has given it enough thought and planning to forego its claim to being a “public benefit corporation.” NewBird AI noted that its new business “would be less focused on the public benefit of environmental conservation,” and asked stockholders to okay changes to its charter to that effect.

Over on Wall Street, this did not dampen enthusiasm for the rebranded company. Quite the opposite. The stock rose 641% in one day. Part of this rise may be attributable to a short squeeze, considering that almost one-fifth of NewBird AI (nee Allbirds) stock was being held by shorts. But another part can be safely chalked up to the irresistible if temporary allure of companies that wrap themselves up in the latest technological craze. The Long Island Blockchain, which started out as the Long Island Iced Tea Company, might be the most memorable example. Facing a delisting by Nasdaq, it changed its name and saw its stock soar more than 400% on the day, before it had even partnered with a blockchain company. All of this recalls the dot-com-era naming trend in which, according to a Purdue University study of 95 companies, adding the appendage “.com” to their names increased their share prices an average of 74% in the ensuing 10 days.

But there could be even more at play here. Analysts at JPMorgan have noted that meme stocks are gaining public popularity of late. The potential reason they point to is a change to the FINRA’s so-called pattern day trader rule, which was approved by the SEC. Drafted in response to the popping of the dot-com bubble, it required active day traders to have $25,000 of equity in a margin account. The new rule replaces that requirement with more flexible terms and has allowed more investors with smaller accounts to do short-term trading.

Let’s hope they don’t lose their shoes.

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