What Makes Allbirds Stock Different?

Allbirds is a New Zealand shoe company founded by Tim Brown, a professional football (that’s “soccer” for Americans) player with a background in business.

Brown had pursued interests in footwear before becoming a professional athlete. Allbirds (BIRD) is the continuation of his earlier attempts, and it has made quite an impact on industry expectations for casual and performance shoes.

How Allbirds Got Started

Tim Brown played professional football for the Newcastle Jets and Wellington Phoenix. He announced his retirement in 2012 and talked about his decision to attend business school.

He already had a bachelor’s degree from the University of Cincinnati. He went on to obtain a Master of Business Administration from Northwestern University’s Kellogg School of Management and a Master’s of Science with a focus on International Management from the London School of Economics and Political Science.

Brown had been testing some ideas for footwear but didn’t like the level of comfort that he could reach with leather shoes. He decided to explore alternative materials that would offer more comfort while also reducing the negative impact of clothes manufacturing on the environment.

He pursued his interests in 2014 with help from a research grant offered by the New Zealand wool industry. To supplement the grant, Brown started a fundraiser on Kickstarter. He managed to collect about $119,000 within five days.

Things moved quickly after Brown recruited Joey Zwillinger, a Wharton MBA graduate, to the company. Zwillinger’s background in renewable materials and biotech made him an essential part of the team. The duo officially launched Allbirds in 2016.

Allbirds managed to attract about $7.25 million in investments during its first year of business.

By 2020, Allbirds had:

  • A partnership with Adidas.
  • More than $50 million in funding.
  • A San Francisco headquarters with 50 employees.
  • A Nashville warehouse with 40 employees.
  • About 350 contracts with a factory in South Korea.

What Makes Allbirds Footwear Different?

Allbirds stands out for its eco-friendly approach to designing and manufacturing shoes that meet the performance expectations of athletes. For example, the company’s trail running shoes are made from:

  • Castor oil-based foam.
  • FSC-certified natural rubber.
  • Eucalyptus tree fiber.
  • Sugarcane
  • Merino wool
  • Recycled polyester
  • Bio-based seam tape, nylon eyelets, and heel counters.

Of course, sustainable materials alone cannot make a footwear company successful. It also needs comfortable, durable designs that will hold up under a broad range of environmental conditions.

Allbirds has found that it can reach these goals while remaining focused on materials that have a minimal impact on the government.

The company has even found ways to control costs and keep shoes affordable for practically any consumer. It’s basic shoes cost a little less than $100. Even if its high-performance shoes cost less than $150, making Allbirds very competitive against other footwear companies.

Are Allbirds Good Quality?

Excellent quality is one of the reasons that Allbirds has been able to thrive in a competitive marketplace dominated by large corporations. From the beginning, Allbirds has focused on choosing the best materials available, with a high preference for materials that do as little harm to the environment as possible.

The Merino wool adds significantly to the quality of Airbirds. The wool stretches easily to conform to the walking and running styles of wearers. Its flexibility also prevents it from tearing, even when running on trails.

The amount of time that someone can use Allbirds shoes depends on several factors, including how often they wear the shoes, whether they keep the shoes clean, and what type of terrain they run and walk on. Not surprisingly, frequent use on rough terrain will shorten the lifespan of Allbirds.

Do Allbirds Get Smelly?

Some people complain that Allbirds shoes get smelly over time. There is some truth to this (wool tends to capture smells), but it only becomes a problem when owners do not care for their shoes properly.

Owners can prevent unwanted odors by washing Allbirds in their washing machines on the gentle cycle with cold water. It’s best to wash them in a delicates bag. After washing, shake the shoes to remove excess water and let them sit in a well-ventilated place to air dry.

Do not put Allbirds in the dryer. Merino wool will likely shrink when exposed to high heat.

Is Allbirds Owned By Adidas?

Allbirds and Adidas are two separate footwear and apparel companies. They do, however, have a partnership to develop a sustainable trainer shoe.

Working with Adidas could open Allbirds to numerous opportunities. Adidas has a global reach that should make it easier for Allbirds to expand into more markets.

Adidas also has an infrastructure that will give Allbirds connections to manufacturing facilities and shorter supply chains. Allbirds seems to believe that the collaboration will result in an even better show with an even smaller impact on the environment.

Are Allbirds Made In China?

Allbirds are not made in China. They are, however, made in Asia. The company has contracts with an apparel manufacturer located in South Korea.

South Korea has much stronger labor laws than China. For example, South Korea has a 40-hour full-time workweek. China has very few restrictions on how many hours companies can force employees to work.

The choice to produce Allbirds shoes in South Korea probably means that the company makes slightly less money per item sold. It also means that Allbirds can market itself as a company that cares about workers as well as the environment. The lower pay requirements in South Korea still help Allbirds save money compared to manufacturing products in the United States.

Allbirds has chosen a middle way that improves worker treatment without making products unaffordable for most consumers.

Allbirds does sell its products through retail stores in China, which may lead to some confusion among people who claim they manufacture apparel there.

Allbirds Stock IPO

Allbirds went public on November 3, 2021. It trades on the Nasdaq under the ticker symbol BIRD.

The day before its IPO, Allbirds sold some shares for $15 apiece. When the company started selling shares to the general public, the price quickly went up to $21.21. By the day’s close, shares had reached $28.64, representing a significant advantage for those who purchased early. Thereafter, the price has suffered a 50% correction as growth stocks suffered severe price declines.

The interest in Allbirds as a company largely comes from its ability to make high-quality, sustainable shoes at affordable prices.

Additionally, the company has shown a commitment to opening more retail stores over the next few years. During the IPO, Allbirds had just 27 retail stores (of course, it also sells its products online).

The company says that it plans to expand to hundreds of stores as quickly as possible. If they manage to reach this goal, it seems likely that share values will continue increasing.

Allbirds Valuation

Like many companies, Allbirds has yet to show a profit. It reported a net loss of $14.5 million in 2019. In 2020, it reported a net loss of $25.9 million. Documents submitted to the SEC show that the company has a net loss of at least $15 million for 2021.

These losses do not necessarily mean anything negative for Allbirds (BIRD). Even Amazon (AMZN), one of the world’s most successful corporations, lost money until 2001, about six years after its founding.

The fact of the matter is that successful companies often need to accept losses as they pursue aggressive growth strategies. As long as they take a strategic path, they can eventually attract enough customers that they start earning profits that more than make up for their previous losses.

So, is Allbirds worthy of your investment money? The consensus estimate shows that 8 out of 11 analysts recommend buying Allbirds stock. Three recommend holding the stock. None of the analysts recommend selling shares, which suggests plenty of growth opportunities.

The stock shows high volatility that could make it an excellent option for investors that want to make a quick profit by purchasing shares low and selling high. Given the recommendations to buy and hold, though, it probably makes sense to view Allbirds as a long-term investment opportunity that could continue moving upward for years or even decades.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.