Allbirds (BIRD), a lifestyle brand that aims to design footwear and apparel using eco-friendly materials made its debut on the NASDAQ earlier this month. According to a CNBC report, the stock opened with its first trade at $21.21 and soared 90% upon its debut.
The company was founded in 2015 and uses natural sustainable materials such as tree fiber, crab shells, sugarcane, and more. As of June 30, Allbirds had 27 stores and uses a digital, vertical retail distribution strategy to reach 2.5 billion people across 35 countries.
BIRD generated 89% of its sales in 2020 through its digital channel. (See Top Smart Score Stocks on TipRanks)
Allbirds is expected to announce its Q3 earnings on November 30. The footwear maker’s revenues grew at a compounded annual growth rate (CAGR) of 32% between 2018 and 2020, from $126 million to $219.3 million.
In 2020, BIRD reported a net loss of $25.9 million that widened from $14.5 million in 2019.
This loss aside, Berenberg Research analyst Brian McNamara sees “several years of strong growth ahead for Allbirds” as “comfort and sustainability” is a key differentiating factor for the brand.
McNamara is the only analyst who has initiated coverage of the stock in the past three months, according to the TipRanks Analysts page.
The analyst’s proprietary survey indicated that only 21% of consumers found the company’s environmental impact insignificant while making a purchase.
Moreover, McNamara pointed out that in a fiercely competitive market, “Allbirds has more strongly emphasized its footwear’s comfort and responsible sourcing to separate itself from the pack.”
However, the analyst remained concerned that while the company has a loyal customer base — as indicated by the fact that last year, 53% of its sales came from repeat customers — there was a drop in sales from new customers.
Another concern for McNamara is that “Allbirds shows no signs of entering wholesale anytime soon, we see strategic wholesale partnerships as a significant growth opportunity.”
The analyst added that “for a primarily digital DTC [direct-to-consumer] company, revenue growth has been lackluster given the favorable backdrop of pandemic-related restrictions.”
As a result, McNamara is sidelined on the stock with a Hold rating and has a price target of $23 with 17.8% potential upside on the stock.
Considering the digital-first strategy of Allbirds, let’s analyze the Website Traffic volume data for the company using the TipRanks Website Traffic tool.
The data is provided by SEMRush Holdings (SEMR) and shows that total year-to-date unique visitors to the site across all devices are up 9.7% year-over-year, at 11.4 million.
Disclosure: At the time of publication, Shrilekha Pethe did not have a position in any of the securities mentioned in this article.
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