On Thursday, Allbirds Inc (NASDAQ: NASDAQ:BIRD) shares retained Neutral rating from BTIG, following the company's third-quarter performance. The firm's stance remained unchanged despite Allbirds' quarterly revenue falling by 25% year-over-year, a figure that aligned with market expectations.
The analyst from BTIG noted that although the guidance for the fourth quarter was below initial projections, it was primarily attributed to the timing of marketing efforts and temporary store closures.
The report highlighted that external factors such as store shutdowns and the shift to international distributor agreements had masked the actual trend in top-line growth. Excluding these impacts, the organic revenue decline has shown signs of improvement, dropping from a 25% decrease in the first quarter to a mid-teens decrease in the third quarter.
The analyst acknowledged the initial positive response to new products but emphasized that it was too soon to predict consumer reaction to the updated offerings and marketing strategies. The full impact of these changes is not expected to be seen until the fall 2025 and spring 2026 seasons.
The BTIG analyst also pointed out that while there are indications of improvement, the timeline for a significant uptick in revenue remains unclear. With investor attention likely fixed on the company's short-term cash burn, the current valuation of Allbirds' stock remains below its historical average and that of its peers. The report concluded with a reiteration of the Neutral rating, indicating a wait-and-see approach for the sustainable footwear company.
In other recent news, Allbirds Inc. declared a 1-for-20 reverse stock split to comply with Nasdaq's minimum bid price condition for continued listing. This strategic move, approved by its Board of Directors and shareholders, is set to convert every 20 shares of issued and outstanding Allbirds Common Stock into a single share, maintaining proportional ownership for each stockholder.
Additionally, Allbirds announced the appointment of Ravi Thanawala, the current CFO of Papa John’s International, to its Board of Directors. Thanawala's extensive experience in the retail and restaurant industries is expected to bolster Allbirds' strategic initiatives and shareholder value.
In earnings news, Allbirds reported its Q1 2024 results, noting an improvement in gross margin and a reduction in adjusted EBITDA loss, despite a 28% drop in sales year-over-year. The company also projects its full-year revenue to be between $190 million and $210 million.
In governance updates, the company's Annual Meeting of Stockholders saw the election of three Class III directors and the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for the year ending December 31, 2024. These recent developments underscore Allbirds' proactive approach to navigating challenges in the retail industry.
InvestingPro Insights
Recent InvestingPro data provides additional context to Allbirds' current financial situation, aligning with BTIG's cautious stance. The company's market capitalization stands at a modest $87.86 million, reflecting investor uncertainty. Allbirds' revenue for the last twelve months as of Q2 2024 was $220.14 million, with a concerning year-over-year revenue decline of 21.84%. This decline is even more pronounced in the quarterly figures, with a 26.81% drop in Q2 2024, corroborating the analyst's observations about the company's top-line challenges.
InvestingPro Tips highlight that Allbirds is "quickly burning through cash" and "analysts do not anticipate the company will be profitable this year." These insights support BTIG's focus on the company's short-term cash burn and the unclear timeline for revenue improvement. Additionally, the tip that the "stock price movements are quite volatile" aligns with the analyst's observation about the company's valuation being below historical averages.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Allbirds, providing a deeper understanding of the company's financial health and market position.
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