Allbirds' 435% jump puts a price on the Nasdaq shell it kept after selling its shoes for $39 million

Allbirds sold its shoe brand for about 51% of what the whole company lost last year ^[19]. That private sale is the latest price anyone paid for the business Allbirds actually ran. What stayed on the Nasdaq is a company with a plan to rent out the chips that run AI programs ^[4]. At the peak, its shares traded at 5.35 times their level before the announcement ^[18].

Gad Allon, a University of Pennsylvania professor of operations, information and decisions, said the new name says less about AI than about money ^[6]. "The bet here isn't really, 'We're going to become an A.I. company,'" Allon told Observer, according to Quartz ^[7]. "The bet is, 'We can use this public shell and the current market appetite for anything A.I.-related to raise capital and acquire our way into relevance.'" ^[8]

If Allon is right, the company's main asset is its share price. Before fees and discounts, a share sold at the peak would bring in 5.35 times the cash it would have fetched before the announcement ^[18]. The company's annual report warned of "substantial doubt" that it could stay in business ^[2]. For a company in that position, the 5.35 multiple matters more than the chip plan. Quartz's account does not say whether NewBird has sold stock, at what price, or what it plans to acquire.

What happens next depends on what the company does with the price. NewBird can sell stock near the high and turn the proceeds into a chip-rental business with revenue. In that case holders were diluted at a good price and the rename was cheap financing. It can raise nothing and let the price drift back toward what the remaining company supports. Or it can follow Cosmoz.com. MIS International had never turned a profit or run any business before 1999 ^[15]. After it moved to rename itself Cosmoz.com, its shares went from well under 50 cents to as high as $5, more than ten times the starting price ^[20]. They settled at $2, still more than four times the old level ^[15].

Over longer periods the 1990s record is worse. In the Purdue sample, the companies with no internet business did best in the six months after renaming, rising 243% more than an index of internet stocks ^[13]. Zap.com was a website venture set up by Zapata, a company that made fish meal. It had no revenue by early 2000, and its board shut down its internet operations on Dec. 15, 2000 ^[16]. Egghead did change its business: it closed its last stores in 1998, cut 80% of its staff and sold only through Egghead.com. Three years later it was bankrupt ^[17].

In my view the evidence supports Allon's reading of NewBird. A company with a going-concern warning sold its operating brand in late March and announced the AI plan in April ^[3][4]. That order put the listing ahead of the business. The counter-case is that chip rental is a real business and a listed company is a quick way into it. Egghead shows that even a real pivot can end in bankruptcy ^[17]. The thesis is wrong if NewBird's next filings show chip-rental revenue paid for with its own cash, before it sells any shares at the higher price.