MW How Allbirds went from a $2.2 billion IPO to a $39 million flop

By Bill Peters

Allbirds agreed to sell its intellectual property and other assets to American Exchange Group for a small fraction of what it was worth just five years ago

Allbirds' expansion into clothing and physical stores turned out to be costly for the company.

What a difference just five years can make for a once-hot shoe company that has turned into a "kind of a cliché."

When sustainable-sneaker maker Allbirds went public in 2021, it landed an initial market capitalization of $2.15 billion on hopes that environmentally minded comfort footwear - made from things like tree fiber and crab shells - would transform a shoe industry dominated by synthetic materials.

The company's market cap reached a high of $4.1 billion when the stock closed its first day of trading 93% above its initial public offering price.

But late Monday - after years of losses, overexpansion, competition and consumer struggles - Allbirds $(BIRD)$ said it had agreed to sell its intellectual property and other assets to fashion-brand manager American Exchange Group (AXNY) for a mere $39 million and planned to seek shareholder approval to wind itself down.

The deal is set to close in the second quarter. It still needs the approval of common stockholders.

After the company's founding roughly a decade ago, Allbirds shoes became a corporate-casual staple for executives and tech bros alike. Its Wool Runner shoe, made from merino wool, helped draw attention on social media. The company talked up its Wool Runner as "the world's most comfortable shoe."

But amid heavy venture-capital funding and pressures for growth, Allbirds has finished every one of its years as a public company in the red, according to FactSet data. Sales in 2025 fell to $189.8 million from an annual peak of $297.8 million in 2022.

Sky Canaves, a retail analyst at eMarketer, said Allbirds' expansion into stores and clothing turned out to be expensive mistakes. Its stores failed to stand out, she said. Brands like Crocs $(CROX)$ and Deckers Outdoor's (DECK) Hoka and Ugg became or stayed popular. Most crucially, she said, Allbirds fell behind with younger consumers.

"A lot of footwear brands that we see today, they kind of live and die by Gen Z's favor," she said.

Allbirds' products also ran up against quality issues, like holes in the shoes. A push into running shoes didn't meet runners' demands, Canaves said. Cultural relevance for its shoes waned.

"They became kind of a cliché with their image as a tech-bro shoe, and they continued to target slightly older consumers - millennials or Gen X - and I think that was the wrong strategy," she said.

Allbirds' announcement came as higher costs of living, most recently driven by surging gas prices due to the Iran war, continue to squeeze shoppers. Demand for so-called discretionary items like clothing and shoes has suffered disproportionately as a result.

After the sale agreement was announced on Monday, Allbirds' stock was still down 16.8% in recent afternoon trading on Tuesday. It has tumbled 61.5% over the past 12 months and plunged 99.6% from its 2021 record close. The company canceled its fourth-quarter earnings call, which had been set for Tuesday afternoon, as a result of the sale announcement.

"Over the past decade, Allbirds has evolved into a lifestyle footwear brand known for modern design, innovative materials and unparalleled comfort," Allbirds CEO Joe Vernachio said in a statement on Monday.

"This next chapter with AXNY builds on the foundational work already completed and sets up the brand to thrive in the years ahead," he continued.

American Exchange Group handles licensing, design and manufacturing for multiple fashion brands. Its portfolio includes brands like Ed Hardy, Mudd and Jones New York. Allbirds also said it would file a statement by April 24 seeking shareholder approval of the sale and a dissolution of the company.

In January, Allbirds said it would close its remaining full-price stores in the U.S. by the end of February. The move, the company said, would help it focus more on online sales, as well as sales at outside retailers and its business abroad.

As of February, it was still pushing ahead with its initial sustainability pitch, announcing the launch of a shoe collection made with a leather alternative derived from plant proteins and recycled tires. But Canaves said sustainability was always a tough sell to shoppers.

"When it comes to how consumers feel or what they say about sustainability and where they'll actually spend their money, there's a huge gap," she said.

-Bill Peters

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March 31, 2026 14:20 ET (18:20 GMT)

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