Allbirds shares sink 18% after company reveals plan to avoid Nasdaq delisting

Ex-All Whites captain Allbirds founder Tim Brown at his Auckland City store. Photo / Dean Purcell

Allbirds shares were down 18% to US58c (92.8c) late in today’s Nasdaq session after the Kiwi-American firm revealed its plan to avoid a delisting for trading under US$1 ($1.60) for too many days.

A reverse stock split will see every 20 shares of Allbirds common stock combined automatically into one share at the end of trading tomorrow.

Shares in the maker of shoes and activewear, incorporating New Zealand merino wool and various sustainable materials, soared to US$29.90 ($47.84) when it listed in late 2021 in an IPO valuing the firm at US$2 billion ($3.2b).

But after poor financial results, fashion challenges and recession, shares fell below US$1 ($1.60) for more than 30 trading days earlier this year, triggering a Nasdaq compliance warning.

To avoid a delisting, the firm has to trade above US$1 for a minimum 10 consecutive trading days before September 30.

When the compliance notice was issued, Clare Capital investment banker Alex Gordon predicted a split as the mechanism to avoid a delisting.

While that has proved to be the case, reverse splits could be living on borrowed time, at least as a mechanism to address a compliance notice.

Last month, the Nasdaq started consulting on a series of measures to tighten delisting rules.

They included a proposal that if a company implemented a reverse stock split within the prior year, the exchange would immediately begin delisting procedures upon non-compliance rather than providing an automatic 180-day compliance period.

Allbirds made a net loss of US$19.1 million ($30.56m) in its June quarter, compared to US$28.9m ($46.24m) in the second quarter of 2023.

The Kiwi-American firm’s cumulative losses for 2024 now stand at US$46.5m ($74.4m), compared to US$64.1m ($102.56m) in the first half of last year.

June quarter revenue fell 27% from the year-ago $70.5m ($112.8m) to US$51.6m ($82.56m).

The firm finished the quarter with US$87m ($139.2m) in cash and equivalents versus the year-ago US$140m ($224m).

The firm said it was in the final stages of a restructure that included store closures, a move from direct sales to distributors in various regions, and founders ex-All White Tim Brown and biotech engineer Joey Zwillinger stepping down as co-CEOs.

The new executive team was drawn from more traditional retail and footwear backgrounds.

Brown remained an Allbirds director but had also recently taken on roles outside the company, becoming a partner with Icehouse Ventures and emerging as one of the backers of A-League newcomer Auckland FC.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.