Allbirds stock analysis. BIRD stock.
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Founded in 2015, it didn't take long for Allbirds to be called “Silicon Valley’s favorite sneaker,”
The shoes were flying off the shelves, the company expanded into 30 countries and last year generated almost $300 million in sales.
However, Allbirds is actually in a precarious position right now with its share price dropping to just $1.15. That gives the company a market cap of 170 million on yearly revenues of 298 million.
So revenue has more than doubled over the last four years but the company’s earnings have turned sharply negative. Adjusted ebitda was negative 1.3 million in 2019 but last year the loss ballooned to over 60 million. That’s a big issue because the company;s cash balance is only 167 million and Allbirds is expected to keep burning cash over the next few quarters.
The big problem for Allbirds is that the company tried to expand too quickly. It opened up more than 50 retail stores over the last 4 years. Meanwhile supply chain issues and inflation have ramped up costs just like for every other retailer.
In hindsight, that expansion was far too aggressive and now the stock is a risky bet.
Sales are expected to fall by 20% this year as well and, again, after burning $122 million of cash in 2022, the company has only $167 million of cash left.
But, there is potentially a way out for Allbirds if it can manage to steady the ship and survive just a little bit longer.
After all, the product is still in demand and the company still makes over 250 million dollars in sales.
At such a low market valuation, the company might be an interesting acquisition for a larger footwear business like Deckers. Deckers has a history of buying other brands and they might like to get Allbirds on the cheap. And that would likely see the Allbirds share price move sharply higher.
#stocks #investing #stockmarket #stockstowatch
Join our Substack for more: https://www.overlookedalpha.com
Founded in 2015, it didn't take long for Allbirds to be called “Silicon Valley’s favorite sneaker,”
The shoes were flying off the shelves, the company expanded into 30 countries and last year generated almost $300 million in sales.
However, Allbirds is actually in a precarious position right now with its share price dropping to just $1.15. That gives the company a market cap of 170 million on yearly revenues of 298 million.
So revenue has more than doubled over the last four years but the company’s earnings have turned sharply negative. Adjusted ebitda was negative 1.3 million in 2019 but last year the loss ballooned to over 60 million. That’s a big issue because the company;s cash balance is only 167 million and Allbirds is expected to keep burning cash over the next few quarters.
The big problem for Allbirds is that the company tried to expand too quickly. It opened up more than 50 retail stores over the last 4 years. Meanwhile supply chain issues and inflation have ramped up costs just like for every other retailer.
In hindsight, that expansion was far too aggressive and now the stock is a risky bet.
Sales are expected to fall by 20% this year as well and, again, after burning $122 million of cash in 2022, the company has only $167 million of cash left.
But, there is potentially a way out for Allbirds if it can manage to steady the ship and survive just a little bit longer.
After all, the product is still in demand and the company still makes over 250 million dollars in sales.
At such a low market valuation, the company might be an interesting acquisition for a larger footwear business like Deckers. Deckers has a history of buying other brands and they might like to get Allbirds on the cheap. And that would likely see the Allbirds share price move sharply higher.
#stocks #investing #stockmarket #stockstowatch
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NewsTranscript
00:00 Should you buy Allbirds stock, ticker symbol BIRD.
00:04 Founded in 2015, it didn't take long for Allbirds to be called Silicon Valley's favourite
00:09 sneaker.
00:10 The shoes were flying off the shelves, the company expanded into 30 countries and last
00:14 year generated almost $300 million in sales.
00:18 However Allbirds is actually in a precarious position right now with its share price dropping
00:22 to just $1.15.
00:24 That gives the company a market cap of $170 million with yearly revenues of $298 million.
00:31 So revenue has more than doubled over the last 4 years but the company's earnings
00:35 have turned sharply negative.
00:38 Adjusted EBITDA was -$1.3 million in 2019 but last year the loss ballooned to over $60
00:44 million.
00:45 That's a big issue because the company's cash balance is only $167 million and Allbirds
00:50 is expected to keep burning cash over the next few quarters.
00:54 The big problem for Allbirds is that the company tried to expand too quickly.
00:58 It opened up more than 50 retail stores over the last 4 years.
01:02 Meanwhile supply chain issues and inflation have ramped up costs, just like for every
01:06 other retailer.
01:08 In hindsight, that expansion was far too aggressive and now the stock is a risky bet.
01:13 Sales are expected to fall 20% this year as well.
01:17 And again after burning $122 million of cash in 2022, the company has only $167 million
01:24 of cash left.
01:25 But there is potentially a way out for Allbirds if it can manage to steady the ship and survive
01:30 for just a little bit longer.
01:32 After all the product is still in demand and the company still makes over $250 million
01:37 in sales.
01:38 So at such a low market valuation, the company could be an interesting acquisition for a
01:43 larger footwear business like Decker's.
01:45 Decker's has a history of buying other brands and they might like to get Allbirds on the
01:50 cheap and that would likely see the Allbirds share price move sharply higher.
01:55 Even so, there's a lot of risk involved in that bet and so right now I'm giving
01:59 the stock a neutral rating.
02:01 It's far too cheap to short it but it's a little too risky to buy it right now.
02:06 But these are my personal opinions, not financial advice.
02:09 For more detailed investing ideas, join our sub stack at overlookedalpha.com.