Short Sellers Are Hunting 'Fake AI' Stocks. A Shoemaker Called NewBird AI Is Exhibit A.
Joyce Meng is screen for companies that added AI to their names. Her target: Allbirds rebranded as NewBird AI, a shoemaker pivoting to compute infrastructure. The AI stock market is splitting in two.
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The AI rally has created two economies. Real companies are printing money. Fake ones are playing dress-up. And now short sellers are the immune system, hunting down every company that slapped 'AI' on their business card and called it a strategy.
Joyce Meng, founder of Fact Capital, just laid out the playbook at the Sohn Investment Conference in NYC. Her strategy is surgical: screen for companies that changed their names to include 'AI' since 2022, then bet against the phoniest ones. Target numero uno? Rezolve AI, formerly Rezolve Group Limited. Meng predicted a 60% drop.
But the crown jewel of fake AI? Meet NewBird AI, formerly known as Allbirds. Yes, that Allbirds. The sustainable shoe company that was supposed to revolutionize footwear. Last month, as their wool runners gathered dust in warehouses, they pivoted to 'compute infrastructure.' The stock surged 582% on retail flows before reality hit and most gains evaporated.
The pattern is everywhere. A Chinese landscaping company reinvented itself as an AI server business overnight, complete with Photoshopped product shots and fake employee LinkedIn profiles. They listed workers who don't actually exist at the company. It's not just rebranding. It's corporate catfishing.
Here's what's really happening: the AI market is cleaving in half. On one side, legitimate companies like Cerebras just went public at a $56 billion valuation after an 89% first-day surge. Their AI chips actually work. Their revenue is real. Their IPO was the biggest AI public offering ever.
A rising tide lifts all boats, and a twisting tide takes down a lot of names in the same neighborhood, Meng told the conference. She's describing the AI correction that's already started to separate wheat from chaff.
Short sellers are the market's immune system. They attack weak cells and expose infections. In previous bubbles, this process took years. But AI moves faster than biotech or housing ever did. The fake companies are getting exposed in months, not quarters.
When the full correction comes, it won't distinguish between real and fake AI companies as cleanly as anyone hopes. Nvidia will drop alongside the shoe companies pretending to be chip makers. But the difference is Nvidia will recover. NewBird AI will go back to making sneakers, assuming they remember how.