Allbirds stock price is soaring but headwinds remain: It’s a sell

August 11, 2023 03:20 AM AEST | By Invezz

Allbirds stock price is soaring but headwinds remain: It’s a sell — Image source: Invezz

Concerns about BIRD remains

Allbirds published strong results that beat analysts and internal estimates. The company’s revenue jumped to $70.5 million, a 10% YoY increase. It also expanded its gross margins to 42.8% during the quarter.

Allbirds cash balance came in at $140 million in the quarter as the management slashed costs and continued the restructuring process. The management expects its third-quarter revenue to be between $56 million and $61 million. If this is correct, its revenue growth will be between 23% and -16%.

Despite the strong performance in the third quarter, there are concerns about Allbirds business. For starters, Allbirds was started in New Zealand, where it manufactured comfortable running shoes.

After raising millions of dollars, the company listed in the United States, where the stock jumped initially. These gains were short-lived as investors focused on the company’s losses and challenging expansion strategies.

Allbird’s strategy was to mirror the performance of Lululemon, the Canadian athleisure brand. In addition to its shoes, the company launched other products, including t-shirts, leggings, dresses, and leggings.

Allbirds’ strategy to expand its offerings met a mild reception among customers. Today, most of these products are gone, with the company focusing on its running shoes. These shoes, according to the WSJ, are having some quality issues as well.

Allbirds will likely raise more capital in 2025 since its balance sheet is not moving in the right direction. Its cash and short-term investments moved from $207 million in June 2022 to $140 million and it has a long path to profitability. It lost $104 million in 2022 and it has already lost over $60 million this year.

Allbirds stock price forecast

The daily chart shows that the Allbirds share price has moved sideways since plunging hard in March. In this period, the stock has formed an ascending channel that is shown in red. It has now moved slightly above the upper side of the channel.

The stock has also moved above the 23.6% Fibonacci Retracement level and the 100-day moving average. I believe that these gains will be limited in the long run. As such, I suspect that the shares will retest the lower side of the channel at $1.28.

The post Allbirds stock price is soaring but headwinds remain: It’s a sell appeared first on Invezz.

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