Allbirds may now be under the watchful eye of Wall Street, but the company is not about to change what brought it to the dance.
On Wednesday, the San Francisco-based sustainable footwear and apparel brand began trading on the Nasdaq exchange under the “BIRD” ticker symbol — and quickly took flight.
Allbirds increased the size of its initial public offering and its debut share price, selling more than 20 million shares at $15 each and raising more than $300 million. This gave Allbirds a starting valuation of $2.2 billion and some early momentum as the firm earlier planned to sell just 15.4 million shares at up to $14 each.
But investors wanted to go higher and the stock closed up $13.64, or more than 90 percent, to $28.64.
Related Articles
Tim Brown, cofounder and co-chief executive officer, told WWD the decision to increase the number of shares offered, as well as the price, came as a result of the “great reaction we got coming off our road show.”
You May Also Like
He said investors appreciate the company’s mission to shift from plastic and synthetic materials to natural ones, as well as its growth potential. “So we were able to raise the price and the share number.”
Investors were apparently not put off by the fact that the company is still operating in the red. When filing the papers for the IPO, Allbirds revealed that although it is on a strong growth trajectory with net revenues increasing from nearly $194 million in 2019 to more than $219 million in 2020, its losses have also been mounting. Allbirds registered $14.5 million in losses in 2019, which widened to $25.8 million in 2020.
The company said in its IPO filing: “We have incurred significant net losses since inception and anticipate that we will continue to incur losses for the foreseeable future. If we are unable to maintain and enhance the value and reputation of our brand and/or counter any negative publicity, we may be unable to sell our products, which would harm our business and could materially adversely affect our financial condition and results of operations.”
Joey Zwillinger, Brown’s cofounder and co-CEO, told CNBC Wednesday morning that right before the pandemic hit, the company was close to breaking even and becoming profitable is “well within our sights. We see a very clear and short-term path.”
Brown, too, was nothing but upbeat on Wednesday about Allbirds’ future.
Although he had earlier said there were no plans to go public, the company changed its tune because it believes its recent investments in materials and its team have resulted in the “best product we’ve ever had, so it was time for a bigger stage.”
In addition, by becoming one of only 28 publicly traded B Corps, Allbirds wants to prove that “profit and purpose can work together. That was the driver.”
Being a B Corp means the board is legally bound to balance profit and purpose and publicly share an impact report on how it’s improving society or the environment. “We want to prove business can be a force for good,” he said. “No one at the road show questioned that, which was very telling for us.”
Brown said even though the company is now public and beholden to the pressures that come with that, “we’re just going to keep doing what we’re doing. We’ve grown a lot in a short time but we set out to build a brand for the long term.”
That includes heightening its focus on its vertical model, building out its “small fleet of retail stores” and increasing its global reach. Brown said Allbirds’ international exposure is in its infancy and he believes this is an area where the company can grow long-term.
He said the plan is to continue to invest in the research and development of natural materials, “which is what makes us different,” and add to its stable of “just over 30 stores. We see an opportunity to grow there.” The locations of future stores, he said, will be determined by using the data gleaned from the company’s e-commerce site.
Outside the U.S., Brown said China, Japan, the U.K. and other parts of Europe are tops on Allbirds’ list of countries for expansion.
Brown said he and Zwillinger “have a lot of skin in the game in terms of the business,” but he’s not feeling any pressure. “We started working on this a decade ago and to be able to drive this business with Joey as a partner is special.”
Allbirds, which was founded in 2015, has sold more than 8 million pairs of shoes since its inception and has expanded into apparel, selling T-shirts, socks, underwear, outerwear and more. Activewear was added to the mix this summer. Some 89 percent of its sales come from e-commerce and 11 percent from its retail stores.
Zwillinger holds 13 million shares of the company’s Class B stock, while Brown holds 15.3 million Class B shares, giving the pair of them 22.3 percent of the overall voting power and significant input on board-level decisions. Class B shares can be converted to Class A shares like those in the IPO on a one-for-one basis, but carry 10 times the voting rights.
Morgan Stanley, J.P. Morgan Chase & Co. and BofA Securities Inc. are acting as lead book-running managers for the offering. Baird, William Blair, Piper Sandler, Cowen, Guggenheim Securities, KeyBanc Capital Markets, Stifel Financial Corp., Telsey Advisory Group, C.L. King & Associates, Drexel Hamilton, Loop Capital Markets, Penserra Securities LLC, Ramirez & Co. Inc. and Siebert Williams Shank are acting as co-managers for the offering.
Allbirds’ biggest investors include affiliates of Maveron, Tiger Global Management LLC, T. Rowe Price Group Inc., Fidelity Investments and Lerer Hippeau Ventures, the filings show.
On Wednesday, PETA also became one of Allbirds’ first shareholders, a move that it said will allow the group to attend annual meetings and urge the company to swap wool for vegan textiles. PETA and its affiliates have documented cruelty to sheep while visiting 117 wool operations worldwide,” the company said.
At the time of the registration statement, Allbirds said: “The principal purposes of this offering are to increase our capitalization and financial flexibility and create a public market for our Class A common stock.” It added that: “We cannot specify with certainty all of the particular uses for the net proceeds we receive from this offering. However, we currently intend to use the net proceeds we receive from this offering for general corporate purposes.”
Allbirds is a lifestyle brand that uses naturally derived materials to make sustainable footwear and apparel. It started by using superfine New Zealand merino wool and has evolved to include a eucalyptus tree fiber knit fabric and a sugarcane-based EVA foam. Allbirds has a presence in 35 countries and operates 35 stores as well as an e-commerce site.
Allbirds is one of several fashion companies jumping into the public market including Warby Parker, ThredUp, Poshmark Inc., The Honest Co., Rent the Runway, Dr. Martens, Mytheresa, On running shoes and medical scrubs brand Figs.