Beyond Meat stock price: will its shares make a comeback?
Beyond Meat shares rose by 700 per cent after its IPO but have since collapsed. Will the plant-based protein company make a comeback?
The Beyond Meat stock price was sizzling in the immediate aftermath of its long-awaited initial public offering.
Headquartered in California, the company bills itself as the future of protein. It has developed a series of plant-based products which aim to emulate both the taste and texture of meat. Given how increasing numbers of consumers are giving veganism and vegetarianism a try – some because of health concerns and others over fears for the environment – the Beyond Meat IPO seemed to coincide with a seismic shift in the world’s eating habits.
But a lot has happened since the company went public in May 2019. Beyond Meat shares were initially priced at $25 at the time of the IPO and later surged by more than 700 per cent to breach the $200 barrier. It was being touted as one of the hottest vegan companies in which to invest and it was seen to be streets ahead of major food brands. Not only was it forging ahead with a plant-based future but it was also aiming for mass market appeal by targeting its products at meat eaters seeking an alternative.
Half a year on from the Beyond Meat IPO, it’s a much different picture. The Beyond Meat stock price has tumbled from a high of $239.71 to sit just above $80 at the time of writing – a two-third decline. It is the second-most shorted stock in the Russell 1000 index, which monitors the biggest publicly listed companies in the US.
There were also grave concerns that those who invested before the IPO, as well as company employees, would cash out en masse when a lock-up period ended at the end of October. Indeed, according to papers filed with the US Securities and Exchange Commission, some have. Beyond Meat’s chief financial officer has pocketed almost $5.7m after selling 70,000 of his shares, while director Bernhard Van Lengerich sold more than 130,000 shares with a price tag of $11m.
Beyond Meat stock price forecast
The dramatic decline in the Beyond Meat share price comes despite the company’s impressive progress in going mainstream – and reaching as many consumers as possible. McDonald’s has been putting the company’s burger patties to the test in some of its stores in Canada. The so-called “PLT” – plant, lettuce and tomato – was piloted across 28 outlets in Ontario for a 12-week period. Some financial analysts believe that this will be the precursor to a more substantial rollout across the US, where McDonald’s had 13,905 restaurants in 2018, and potentially worldwide.
Gaining a substantial foothold in the world’s biggest fast-food chain would be an epic achievement, a milestone that could make Beyond Meat shares seem undervalued at their current $80 price point. Indeed, the company has already enjoyed success with its previous experiments. KFC put Beyond Meat’s chicken substitute through its paces during a single-restaurant trial in Atlanta in August 2019, and supplies ran out in less than five hours as curious diners started to queue as early as 8am.
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Some analysts have also been surprised at the lacklustre performance of the Beyond Meat stock price in recent weeks, which came despite a robust set of financial results for the third quarter of 2019. The company said its net revenues increased by 250 per cent year-on-year to reach $92m, with gross profit rising to $32.8m – a margin of 35.6 per cent. When it comes to the whole of 2019, the company has also raised its net revenues estimates substantially – from $240m to a range of $265m to $275m.
When it comes to threats on the horizon, it remains to be seen whether or not more established competitors will catch up. One of its rivals, Tyson Foods, says its plant-based offering Raised & Rooted is now in 7,000 stores – and this figure is rising at an aggressive pace. Some analysts have suggested that companies such as Tyson have the potential to leapfrog Beyond Meat, especially considering they are heavyweights in the food sector. Established in 1935, Tyson is the world’s second-largest processor of chicken, pork and beef as well as the biggest exporter of US beef to the world. With a net income of $3bn in 2018, and dozens of beloved consumer brands in its stable, it could be argued that this company has the resources and the reach to blow Beyond Meat out of the water.
Beyond Meat is also likely to feel the heat when it comes to the nutritional content of its products. With consumers ever conscious about their diets, many will likely be alarmed to learn that a plant-based patty is on par with a normal beef burger when it comes to saturated fat, salt and calories.
As things stand, the Beyond Meat share price looks as if it is one to watch. A group of 13 analysts believe that, based on the current price of $80, the stock could reach highs of $185 or lows of $70 in the coming 12 months, with a median estimate of $106.
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