• Allbirds plans to sell its intellectual property, rebrand as "NewBird AI," and pivot into a GPU-as-a-Service business.
• William Blair dropped coverage, warning the stock's explosive rally was fueled by low float, momentum trading, and speculative hype.
• Retail traders remain heavily bullish despite the overnight pullback.

Allbirds Inc. shares nosedived over 20% in overnight trading heading into Thursday, a sharp reversal after the stock surged over 580% in its best session on record the previous day.

The catalyst for both the surge and the skepticism is the same: Allbirds said it would sell its intellectual property to American Exchange Group, raise $50 million through a convertible financing facility with an undisclosed institutional investor, rebrand as "NewBird AI," and pivot to becoming a GPU-as-a-Service company, targeting customers who can't reliably access AI computing capacity through spot markets or hyperscalers.

William Blair's Had Enough Of BIRD

According to The Fly, William Blair has walked away from coverage of Allbirds following the announcement, and didn't mince words on the way out. "This is by any measure a Hail Mary," the analyst wrote, pointing in part to a provision in the associated proxy that would allow management to fully dissolve the business within 12 months of a planned May 18 special shareholder meeting to approve the measures.

Blair noted that BIRD shares went "hyperbolic" on Wednesday, trading at an enterprise value of around $140 million on the news, compared to roughly $10 million before the announcement. The firm flagged "deep uncertainty" around the GPU pivot and described Wednesday's rally as driven by "very shallow float, automated momentum, and unchecked hype." 

In the liquidation scenario, a third-party analysis cited by Blair placed the company's liquidation value between $0.02 and $1.83 per share, a wide range that underscores the uncertainty of the outcome. The sale to American Exchange Group could still yield a special dividend, the firm noted.

BIRD’s stock closed Wednesday up 582% at $16.99 and was last changing hands at $13.05, down 23.2%, around 2:00 a.m. ET. Of the two analysts still covering BIRD on Koyfin, both rate it 'Hold.'

But Retail Wants More Of BIRD

On Stocktwits, retail sentiment stands in stark contrast to Wall Street's alarm, with the mood firmly in 'extremely bullish' territory and BIRD's follower count up over 60% in the past 24 hours.

Traders are overwhelmingly framing the overnight pullback as an opportunity rather than a warning.

"The after-hours low-volume pullback may turn out to be a bear trap, as current price levels could bring new demand. Low float and a strong holder base, combined with demand from genuine buyers and shorts seeking to cover, could ignite the second phase of the rally, this time from a higher base," said one bullish user.

"$BIRD shorting bird is like shorting $GME on steroids when they were ascendant," posted another, referring to the 2021 meme stock frenzy when retail traders enabled a short squeeze of GameStop.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: GM, Ford Back In WWII Mode? Pentagon Reportedly Wants Detroit To Make Weapons Amid Sliding Auto Sales