How To Buy Allbirds Stock

The world’s attention is turning towards sustainability, and renewable energy, electric cars, and plastic alternatives are just the beginning. There is room for increased use of earth-friendly materials in almost every industry, and some forward-thinking companies are already pioneering new, more environmentally sound practices. Allbirds is one such company.

New Zealand native Tim Brown partnered with Wharton MBA graduate Joey Zwillinger to create a new kind of shoe that relies on natural materials. Their company, Allbirds, was founded in 2014 as a certified B Corp, and it is already making a dent in the world’s $300 billion footwear market.

On November 3, 2021, Allbirds began trading publicly, and investors are keeping a close watch on what is likely to be the future of footwear. Is Allbirds stock a smart choice for your portfolio? Here are four things to consider before buying:

Is Allbirds Profitable?

Allbirds (BIRD) released its first earnings report as a publicly-traded company on November 30, 2021. The results were mixed, as is common with companies in the earliest stages of growth. The good news is that Allbirds’ third-quarter revenue increased by 33 percent year-over-year.

The bad news is that the company’s losses also increased, which didn’t impress investors. Net losses came in at $13.8 million or $0.25 per share for the third quarter. During the same period in 2020, net losses totaled $7 million or $0.13 per share.

Of course, simply looking at the total loss in isolation doesn’t tell the whole story. Context is particularly important in this case. Allbirds incurred unusual expenses during the quarter, including the costs associated with listing its stock. On top of that, Allbirds opened a number of new brick-and-mortar locations – another costly endeavor.

The recent increase in losses isn’t necessarily a reason to skip this stock. Analysts have suggested that Allbirds has a clear path to profitability, but it has made a deliberate decision to focus on growing market share at this time. If this strategy is successful, foregoing immediate profitability in favor of greater market share will deliver larger returns long-term.

Will Allbirds Stock Go Up?

In its short time on the Nasdaq, Allbirds stock hit a high of $32.44. However, it is trading at less than half of that today. The drop isn’t especially worrisome – share prices often go down after the initial excitement of an IPO has waned. The question is whether Allbirds stock will go up, and if so, is now the right time to buy?

The stock market is unpredictable, but possessing certain characteristics increases the odds that a company’s stock will go up. One of the most important indicators of a company’s future success is whether and how it differentiates itself from the competition. After all, the footwear market is fairly crowded – even more so in the athletic footwear space. Fortunately for Allbirds investors, the company has something other shoe brands don’t: a mission that resonates with its consumer base.

Allbirds is making waves among key demographics with its commitment to environmentally sound business practices and green products. That’s important because climate change is a chief concern for Generation Z, and environmental issues are top-of-mind for Millennials. Allbirds is one of the few shoemakers putting real effort into earth-friendly innovation. The same can’t be said for industry leaders like Nike (NKE), Adidas, and Vans.

With consumers making value-based purchase decisions and investors putting more into ESG (environmental, social, and governance) stocks, there is every reason to believe that Allbirds stock will go up. Those that buy Allbirds stock at the current low price will benefit most as prices rise.

Will BIRD Stock Go Down Further?

Allbirds has the same challenges every new company faces, so Allbirds stock comes with a certain level of risk. For example, Allbirds is not yet profitable, which appears to be part of a deliberate strategy.

However, a few wrong moves could put Allbirds in a precarious financial position, delaying the point at which the company makes more money than it spends.

It is also possible that Allbirds won’t always have the upper hand in environmentally-friendly practices. Market leaders are well aware that sustainability is a priority for their consumer base, and they are likely to launch their own green product lines. If they can do so in a way that is meaningful to consumers and they can do it at a lower price, Allbirds may struggle to gain market share.

Does Allbirds Stock Fit Into Your Portfolio?

The next question for investors who are confident in Allbirds stock is whether this type of stock fits into an otherwise diversified portfolio.

While footwear is a must-have regardless of economic conditions, stock in high-end shoe companies typically goes down when the larger market declines.

If your portfolio includes too many consumer discretionary stocks, it is hard to weather economic ups and downs.