Good morning, investors. When Jim Cramer said “there’s always a bull market somewhere,” he probably was not talking about a has-been shoe company attempting to revive itself with a pivot into cutting-edge AI technology. |
One of the most meteoric stock moves in recent years has made me reconsider the original AI bubble narrative. |
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Pulled up by shoe-straps |
The shoe brand that once dominated the Silicon Valley startup scene just rebranded into an AI company. |
On Wednesday, Allbirds sold its brand for $39 million, crowned itself as “NewBird AI,” and pivoted to a GPU-as-a-Service firm, sending its stock up more than 700%. |
Just as every executive in the late 1990s wanted to claim they ran “internet” companies, the same trend has followed with AI. |
Yet the two closest analogs for Allbirds don’t exactly inspire confidence, according to a new report from ProCap Insights: |
BuzzFeed, January 2023: Despite declining revenue, the stock jumped 120% the day after announcing a deal with OpenAI before erasing all of its gains within 8 months Rent the Runway, April 2024: Its AI-search language immediately boosted the stock 270%, but it gave back those gains within 6 months
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At this moment, Allbird’s business looks more like BuzzFeed than Rent the Runway’s. |
Its $39 million brand sale values Allbirds at barely 1% of its $2.4 billion IPO valuation November 2021. |
More troublesome, however, is that the company has reported 17 straight losing quarters. |
Still, the market seems optimistic about Allbirds’ announcement of a $50 million convertible. |
Compare that to CoreWeave — another GPU-as-a-service company — which raised $28 billion in 12 months. |
The BuzzFeed and Rent the Runway analogs suggest Allbirds’ erases almost all of its gains within months. |
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Market snapshot |
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Elsewhere |
📈 The S&P 500 broke above 7,000 for the first time since January. It breached a new record with investors continuing to brush off concerns about the Middle East and ramifications out of the Strait of Hormuz. |
🚢 The US military says its blockade of Iran's southern coastline is now "fully implemented." More than 10,000 troops and over a dozen Navy ships have cut off roughly 90% of Tehran's seaborne trade. (Reuters) |
🏦 Morgan Stanley hit a record $20.6 billion in quarterly revenue. EPS of $3.43 beat consensus by nearly 13%, driven by a post-crisis high in fixed income, a 74% jump in advisory fees and the best-ever quarter in wealth management. (CNBC) |
🚀 Bank of America posted $8.6 billion in first-quarter profits and crushed estimates. Equities trading revenue surged 30% to $2.83 billion while net interest income climbed 9% to $15.7 billion. (Yahoo Finance) |
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Rapid-fire |
The Fed’s Beige Book shows businesses remain on edge due to geopolitics (Yahoo Finance) AI-generated podcasts are coming to Wall Street (Axios) Some tankers are starting to go through the Strait of Hormuz (CNBC) Robinhood stock jumped 10% after the SEC removed limits on day trading activity (Yahoo Finance) The next Fed Chair has $100 million riding on Stan Druckenmiller’s portfolio (ProCap Insights) President Trump said he would fire Jerome Powell if he stays on after his Fed Chair term ends (Yahoo Finance) The last time Nvidia stock did this it soared 80% (Opening Bell Daily)
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On this day |
🗓 April 16, 2010: The SEC charged Goldman Sachs with fraud for structuring and marketing a subprime mortgage CDO while letting hedge fund Paulson & Co. secretly pick the underlying assets and bet against them. Investors lost over $1 billion. |
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Last thing |
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