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Update: As Allbirds Moves Closer to IPO, the Rewards — and Risks — of Going Public

Updated, June 28: After WWD reported last week that Allbirds had confidentially filed for an IPO, citing financial and industry sources, Bloomberg said on Sunday that the company has tapped Morgan Stanley for the IPO, which could value the company at $2 billion. Allbirds did not return emails seeking comment.

What We Previously Reported:

In April, The New York Times and other sources suggested that the Silicon Valley darling was headed for a debut on Wall Street.

At the time, Allbirds’ website, plus other job sites, showed that it was hiring for an “SEC Reporting and Technical Accounting Manager,” who would “lead the charge on our SEC filings” and possess “IPO experience, including knowledge of the S-1 filing process.”

Such steps have fueled discussions among market watchers about the San Francisco-based company’s potential bid to go public at a booming time for the stock market — which is being propelled by a massive fiscal stimulus and ramped-up vaccinations that herald a rebound for the United States economy.

“The U.S. stock market is at an all-time high,” said Jay Ritter, a University of Florida finance professor who studies IPOs. “Many direct-to-consumer companies have seen sales boom recently, and companies with good products at affordable prices will benefit from repeat business.”

Coupled with its digitally native upbringing amid e-commerce’s rapid acceleration, industry experts have also suggested that Allbirds’ upfront messaging, sustainability focus, innovative product as well as continued expansion into new categories and channels are giving the brand an edge.

Last October, Allbirds launched its inaugural apparel line — with products made from fibers derived from discarded shells of marine life, responsibly sourced merino wool, recycled polyester and Tencel, which is harvested from natural materials. It has also unveiled plans to build on its existing physical store fleet of 23 locations as it broadens its product range.

“Allbirds has created an important niche in the shoe market and have now diversified into apparel as well; they prudently have controlled growth,” explained Matt Powell, senior industry advisor of sports at market research firm The NPD Group. “I believe this brand will be around for a long time … [and] the IPO will bring additional cash for expansion.”

It’s also important to note that rumblings of the IPO come just five years after the brand’s founding: In March 2016, CEOs Tim Brown and Joey Zwillinger — both without any prior footwear experience — introduced their first style, the $95 Wool Runner, which Time magazine crowned the “world’s most comfortable shoes.”

Since then, the company has introduced water-repellent trainers and socks, as well as a performance running sneaker, the Tree Dasher. It has also seen strength in the Asia-Pacific region, particularly in the newer markets of Japan and South Korea, plus consistent growth in China. What’s more, in September, Allbirds closed a Series E funding round of $100 million — additional capital that would be used, said the executives, to expand its product assortment, cultivate its international business and broaden its brick-and-mortar presence.

And, according to Jessica Ramirez, retail research analyst at investment research firm Jane Hali and Associates, there’s still more “room to grow” for Allbirds.

“The pandemic [led to] a shift in the retail sector completely. You can almost say we’ve reimagined retail,” she told FN. “There have been a lot of store closures, so ideally these brands can come into new spaces at much cheaper prices.”

Ramirez added, “The positive thing about the majority of DTC brands is that they don’t have any spider webs in their back stock; it’s all clean inventory. They don’t have to clean up like older brands.”

Still, if it goes public, some experts have expressed concerns that Allbirds could face challenges when it inevitably brushes up against sportswear giants that have cemented their hold in the space — think Nike and Adidas — as well as other big names like Under Armour.

Industry estimates have put Allbirds’ yearly sales at just over $83 million, while annual revenues at Nike and Adidas have climbed upwards of $37 billion and nearly $20 billion, respectively.

But it’s not only those comparisons that have stoked skepticism. According to Taleeb Noormohamed, CEO of online deals marketplace Jane, the very act of going public could fundamentally shift the strategies that have made Allbirds a success story for consumers and investors alike.

“Once public, you’re now beholden to shareholders, and the expectations are, of course, different,” he said. “Short-term goals can become far more important than long-term ones, and that can change materially how a company operates. Will shareholders allow the business to run as it has, or will there be new demands that alter the DNA of the brand?”   — Reporting by Samantha McDonald

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