Bird ain’t the word 🐦

No longer a staple part of Silicon Valley’s perpetually casual Friday uniform, the shoes with the Kiwi connection, Allbirds are toeing the line of being delisted. Speaking of a dressing down, the Nasdaq gave notice back in April that Allbirds (BIRD) was no longer in compliance with listing requirements, with the stock trading at under US$1 for 30 consecutive days.

With a return to US$1 looking unlikely, on 30 August Allbirds announced a reverse stock split as a way of meeting the Nasdaq’s requirements and avoiding being delisted. The 1-for-20 reverse stock split will trade every 20 shares of Allbirds class A and class B common stock for one share. Since the split completed 5pm EDT on 4 September, the stock has dropped around 5% further, suggesting that the corporate action didn’t quite elevate the market’s perception of the struggling company. 

The race is ON 🏁

Following in Allbirds’ little carbon footprints, Swiss shoe company On (ONON) made its debut on the NYSE almost a year later in September 2021. On’s 2024 Q2 earnings report showed impressive growth with net sales increasing 27.8% year-on-year. Aiming for a gross profit margin of 60%, reporting came in at 59.9%, up from 59.5% the year prior.

Company fundamentals aside, what has seen these sneaker giants market performances vary so wildly? Does anyone truly care about carbon zero shoes, or do we just want our sneakers looking like a snack? Producing technical performance shoes and kit for athletes has been a medal-winning formula for On, and seen them as the official partner of the entire Swiss Olympic and Paralympic teams. Big brand energy saw their shoes on the podium in the men’s 1500m, the women’s marathon and the tennis. Since the games began, On's stock has climbed just over 12%. 

While not on the podium, Allbirds are still making strides, with 2024 bringing in a new CEO and CFO to try and turn the ship around. “We hit a bump in the road, a slowdown, like every company does, and we’re reacting to it,” says new CEO Joe Vernachio. Losses have already narrowed with Vernachio at the helm, and with his plans to pivot Allbirds branding slightly away from diehard sustainability, it will be interesting to see how far he strays from the flock.

A step too far? 👟

Interest in Environmental, Social Governance (ESG) investing has declined in the US, and closer to home on the Australian markets. Is Allbirds' move to go all-in with a zero carbon shoe (that looks like a sock) coming two years too late? And is On’s commitment to continuous improvement ‘good enough’ to attract the dollar of socially responsible consumers? “Sustainability is very narrowly confined. It makes you feel like you’re sorting your garbage,” 🗑️ Vernachio says. “It feels like work.” 

Allbirds goals of hitting close to zero emissions, and wanting people to buy another pair within 60 days seems like a mismatch in values, especially given past criticism around poor durability, and not lasting the distance. While vocally celebrating low carbon footprints and sustainable production values, by contrast Allbirds have been muted on the shoes end-of-life strategy. In missing this vital piece of the puzzle, sustainability data could begin to look like a vanity metric. Allbirds may need to start translating those figures into something accessible and meaningful to the masses to have an impact on consumers and investors.

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