By Suzanne Kapner

Allbirds was once valued at $4 billion. It just struck a deal to sell most of itself for $39 million.

It is a remarkable fall for the once-highflying company, which captured the hearts and feet of Silicon Valley tech bros, soccer moms and Barack Obama with its eco-friendly wool sneakers.

After struggling for years, the company on Monday agreed to sell its intellectual property and other assets and liabilities to American Exchange Group, whose brands include Ed Hardy and Aerosoles. The $39 million price tag amounts to about one-eighth of the $301 million it raised in its initial public offering in 2021.

Founded in 2016 by Joey Zwillinger, an industrial engineer, and Tim Brown, a former professional soccer player, Allbirds tapped into the idea that businesses can make money, be innovative and do good in the world. To help the planet, Zwillinger and Brown believed consumers didn't have to stop buying stuff, just that the stuff needed to be made differently. It leaned on its popularity to pursue a hyperfast growth model pioneered by other online disrupters, such as Warby Parker, that sold goods directly to consumers.

The premise that consumers would pay a premium for sustainably made products turned out to be flawed. "Sustainability comes way down the batting order behind factors like style, price and comfort," said Neil Saunders, a managing director of research firm GlobalData. "Allbirds could have leaned in to any of these things alongside its green credentials but largely chose not to do so."

After its initial success, Allbirds tried to keep the momentum going by introducing new products. Many of them failed, including workout gear made of wool. The wool legging turned out to be see-through. By the time Allbirds discovered the problem, it had already ordered tens of thousands of pairs -- many of which were unsalable. The leggings were discontinued a year later, The Wall Street Journal reported in 2023.

Allbirds tried to expand beyond its base of 30- and 40-year-olds by offering more technical running shoes and other sneakers in brighter colors and edgier patterns designed to attract younger customers. It also pushed into new categories -- underwear, puffer jackets and golf shoes -- but struggled to replicate the success of its first shoe.

The company lost focus, unsure if it was selling to sneakerheads or soccer moms. Loyal customers like the Silicon Valley crowd dropped the brand.

Its stumbles opened the door to other sneaker brands that have attracted tech and fashion trendsetters, such as On and Hoka.

Allbirds shares dropped 16% in Tuesday afternoon trading. As of Monday's close, they had lost more than 95% of their value since the company's 2021 IPO.

Allbirds said the deal still needs approval from stockholders and is set to close in the second quarter of 2026. It said net proceeds would be distributed to shareholders.

Write to Suzanne Kapner at suzanne.kapner@wsj.com

(END) Dow Jones Newswires

March 31, 2026 14:27 ET (18:27 GMT)

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