Based in both the United States and New Zealand, Allbirds (NASDAQ:BIRD) is one of many footwear sellers in the world. However, BIRD stock traders should know that this company isn’t like all the others.
While some other sneaker sellers aren’t particularly Earth-friendly, Allbirds seeks to attract investors who favor companies that emphasize sustainability.
As we’ll see, the Allbirds initial public offering (IPO) was highly successful. According to co-founder and co-CEO Joey Zwillinger, investors were “really attracted by the opportunity to put their capital” into a business that would “create outcomes that were better for the planet.”
However, an auspicious IPO doesn’t guarantee success in the long run. So, let’s delve further into the details as Allbirds threatens/promises to shake up the global footwear market.
A Closer Look at BIRD Stock
A day prior to the IPO, Allbirds priced 20.2 million shares at $15 apiece. Then, on Nov. 3, BIRD stock made its public debut on the Nasdaq. The first trade was at $21.21. The stock closed at $28.64 on that first day, up nearly 91% from the original IPO price.
Of course, most retail investors probably didn’t get to buy the shares anywhere near $15, though it’s back to trading around $21 today.
Still, it quickly became evident that Allbirds was red-hot on Wall Street. The next question was: could this uptrend continue?
Unfortunately for some shareholders, there was a cooling-off period after BIRD stock’s debut.
By Nov. 12, the stock had declined to $21 and change. That’s not necessarily a bad thing, though, as prospective investors might now be able to take a position at a more favorable price point.
On the other hand, if BIRD stock falls below the $15 level, caution will definitely be advised.
Creating Great Experiences
It’s crystal clear that Allbirds isn’t targeting consumers won’t don’t care about the quality of their shoes. As Zwillinger put it, “My business is in making fantastic shoes and selling to customers and creating great experiences.”
In other words, Allbirds’ shoes are meant to be top-tier in terms of quality, and the customers are willing to pay extra for that.
Evidently, the customers also care about how the shoe materials are sourced. Thus, Zwillinger was careful to emphasize that Allbirds uses “naturally derived materials to make incredibly comfortable shoes.”
The company also wants you to know that it has a broad and strong e-commerce presence. In fact, Allbirds’ corporate profile states that the company serves customers in 35 countries through its e-commerce platform.
Allbirds also has a sprawling network of retail stores, however, with brick-and-mortar locations in the U.S., Europe, New Zealand, China, Japan and South Korea.
Room for Improvement
Even though its IPO just recently took place, Allbirds has actually been around since 2015, and has sold over 8 million pairs of shoes to more than 4 million customers globally.
As of June 30, the company had 27 physical stores, which accounted for 11% of Allbirds’ sales. So again, e-commerce has been crucial as 89% of sales came through Allbirds’ digital channels.
Apparently, Allbirds hasn’t had much difficulty selling its eco-friendly products, as the company’s net revenue increased from $126 million in 2018 to $219.3 million in 2020.
However, there’s room for improvement in terms of Allbirds’ bottom line.
That’s because the company sustained a net loss of $14.5 million in 2019 and an even bigger net loss of $25.9 million in 2020. Fortunately, Zwillinger seems to see a light at the end of the fiscal tunnel.
“Before the pandemic, we were already very close to and on the path to breakeven… So this is something well within our sights, and we see a very clear and short-term path or else we wouldn’t be going public,” Zwillinger assured.
The Bottom Line
Allbirds isn’t a perfect investment. It’s definitely speculative, so please don’t load the boat on BIRD stock.
The company is interesting, though, as it occupies a very specific niche in the footwear market. Besides, Allbirds might achieve profitability in the near future.
And if that happens, then there should be much more room for BIRD stock to fly.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
