Should you buy Allbirds stock?

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.

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