Alex Edmans, a professor of finance at London Business School, studies why markets misprice stocks. On the Barron’s Streetwise podcast published September 25, 2026, Edmans, author of The Madness of Markets: Why Smart Investors Make Crazy Decisions and How to Exploit Them, pointed to Allbirds (NASDAQ:BIRD) as evidence that investors chase labels. The stock closed at $2.32 on September 25, 2026.
Edmans’s Two-Sided Theory of Mispricing
Edmans argues markets misprice in two directions: they underreact to meaningful information and overreact to meaningless signals. He calls the second failure binary thinking, where investors respond to a label without asking whether the business can deliver on it.
His example: after Allbirds shifted itself as an AI company in April, the stock price went up by 582% in a single day, even though the move had nothing to do with AI. He compared it to the dot-com era, when companies that added .com or .net to their name saw prices rise by an average of 73%, even if there was no change in strategy.
How Big Was the Jump? Reputable Outlets Disagree
On April 15, 2026, The Guardian reported that Allbirds shares surged after the wool sneaker maker announced a pivot to AI. Forbes reported the same day that Allbirds now says it is an AI company, and the San Francisco Chronicle reported shares soaring.
The size of the move is genuinely disputed. Reuters reported shares jumping over 400%. Euronews reported a rise of over 550%. Business Insider reported a spike of more than 800%. Two days later, Yahoo Finance reported the stock had gained 350% across the week. Edmans’s figure sits inside that range. One plausible explanation is that intraday peaks, closing prices and multi-day windows produce very different numbers for the same event. The headline number on a move like this is softer than it sounds.
Our data lists the SEC registrant name as Allbirds, Inc. with ticker BIRD. The AI pivot announcement is well documented.
A Shrinking Company Primed for a Label Rally
In the third quarter of fiscal 2025, Allbirds reported net revenue of $32.99 million, down 23.3% year over year, according to its earnings release filed with the SEC. Cash fell to $23.70 million from $78.63 million a year earlier. A small, shrinking company is exactly the kind of stock where a label change can move the price enormously.
Where Allbirds Trades After the AI Rally Faded
Across April, the stock rose from $1.82 to $4.52, a gain of 148.09% for the month. Since then it has given most of that back. Through September 25, shares are down 18.72% year to date, down 42.14% over the past year, and down 99.42% from a split-adjusted $402.23 in November 2021.
Allbirds now has a market capitalization of $21,612,656. For scale, CNBC’s April 15 headline described the pivot as adding $127 million in value.
Naive Buyers or Savvy Front-Runners?
Host Jack Hough asked whether buyers are naive or strategically front-running other naive investors. Edmans said both are possible, noting behind any crazy decision there is a grain of sensibility, namely the instinct that if you snooze, you lose.
He said the same dynamic drove the ESG boom, where funds pulled in “loads of money coming in” simply by adding “ESG” or “sustainability” to their name, in some cases while “holding tobacco companies or defense or fossil fuels.” Hough concluded the behavior is “wholly disconnected from the fundamentals of the company.”
Edmans’s Shorting Idea Carries Serious Risk
Edmans suggested investors could short these companies after they have overreacted to something which is no more than cosmetic. Shorting means borrowing shares, selling them, and hoping to buy them back later at a lower price. Because a stock has no price ceiling, theoretical losses are unlimited. Short positions require a margin account and can fail even when the thesis eventually proves correct.
What the Allbirds Episode Teaches Investors
A label moved Allbirds stock enormously while the business stayed the same, and the price has since drifted back toward where it started. That makes Allbirds a clean illustration of binary thinking. Investors considering any label-driven rally should treat it as a single data point.