US$4.1b peak valuation
Allbirds reached its peak market valuation of US$4.1 billion ($7b) on November 3, 2021, the day of its initial public offering (IPO) on the Nasdaq.
Allbirds founder Tim Brown at his Auckland City store in May 2022. The ex-All White captain started the sustainable shoe business from his Cuba St flat in 2014. Photo / Dean Purcell
But its shares have since lost 99.5% of their value.
The US$39m transaction announced overnight at least represents a premium on Allbirds current market cap, which was sitting at US$19.5m in late trading.
What went wrong?
A horror run saw Covid supply chain issues, two big Wall Street Journal features claiming the company’s shoes – once worn by former President Barack Obama, Leonardo DiCaprio and a legion of tech bros – had fallen out of fashion, and would fall apart in the rain.
Brown chats to Northburn Station manager and merino grower Bevan McKnight in 2018.
Allbirds responded that its footwear was durable and that its high percentage of repeat customers illustrated satisfaction with its product.
There was more grief in 2023 as Amazon released dupes at a much lower price.
More recently, Allbirds’ Vietnam-based manufacturing operation has faced challenges from Trump administration tariffs.
Cash started to run low as revenue dropped and Allbirds lost money quarter after quarter, despite cost-cutting measures that included closing most of its stores.
Straight out of Wellington
Brown quit as co-CEO in May 2023 but remains a director.
The Wellington Phoenix midfielder and All Whites captain started Allbirds from a Cuba St flat in 2014.
He teamed with Joey Zwillinger, a San Francisco biotech engineer, to design shoes made from New Zealand merino wool, plus various recycled materials.
Allbirds had a 20:1 reverse stock split in September 2024 after it was threatened with a Nasdaq delisting as its shares traded below US$1 for 30 days in a row.
The pair staged a US$119,000 Kickstarter crowdfunding campaign then went on a venture capital roll with a US$1.7m seed round in 2016, a US$7.25m Series A the same year, a US$50m Series B round in 2017, a US$75m Series D in 2020 and a US$100 Series E the same year at a US$1.7b private equity valuation.
Brown was briefly worth US$650m as Allbirds’ stock doubled in value on its first day of Nasdaq trading in 2021.
Cash crunch
On November 12 last year, Allbirds reported a third-quarter net loss of US$20.3 million on revenue that fell 23.3% from the year-ago quarter to US$33m.
The firm finished the quarter with cash of US$11.3m (net of debt). At the same point a year earlier, it had US$66m in the bank, despite aggressive cost-cutting.
At the same time, Allbirds downgraded its forecast for its crucial December quarter.
At the time, Clare Capital principal Mark Clare told the Herald that the prediction of lower Christmas period sales was ominous.
“They’ve been unable to address underlying financial issues, with quarterly sales down 55% compared to September 2022,” Clare said.
He said it pained him to say it as a shareholder, friend of co-founder Tim Brown and a wearer of Allbirds, but he was forced to conclude that things would soon come to a head, with a trade sale one of the options on the table.
“Management has been doing what you would expect, trying to improve sales – or reduce sales declines – and reducing costs,” Clare said.
“Unfortunately, that doesn’t appear to be turning things around fast enough and there isn’t an unlimited runway.”
Readers split
After the Wall Street Journal mauled the Kiwi-founded shoe brand, some readers strongly defended it.
“I have six pairs and just love them. Am about to buy some more,” Marie F said.
“So comfortable when travelling and everyday wear. Packed 3 pairs for trip to UK recently.”
Paddy G retorted, “Two years ago I bought a pair, slipped and fell ‘a over k’ on a wet pavement so only wore then in the dry, then they stretched so no support, basically use them as slippers.”
Retired Herald economics columnist said this morning, “Sad to read about Allbirds. It has prompted me to buy a pair – my sixth.”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.