Faux-meat company Beyond Meat (NASDAQ:BYND) was one of 2020’s stars. But after topping out at $221 in January 2021, BYND stock has lost nearly three-quarters of its value.
Shares have been in a consistent downtrend since late June, while BYND stock has become one of the most shorted stocks in the market.
Some blame must go to slowing growth. A bigger-than-expected third-quarter loss also caused traders to sour on BYND stock. Meanwhile, the company has never reported a profit and isn’t expected to do so until 2023.
BYND Stock at a Glance
Shares of Beyond Meat shot out of the block after the company’s May 2019 initial public offering. Within months, BYND stock hit an all-time high of nearly $240. Shares then plunged to a pandemic low below $50.
Caught up in the broader market rebound, BYND stock once again traded near the $200 level in October 2020. Since then, shares have made a series of lower highs and lower lows as rebound attempts failed. And it’s been all downhill for the past seven months or so.
The company is expected to report fourth-quarter and full-year results later this month. Analysts are expecting Q4 revenue of $101.4 million, which would represent a year-over-year decline of 0.5%. However, full-year revenue is expected to increase 14% to $465.5 million. Analysts are also calling for a loss of 70 cents per share for the fourth quarter and a $2.22 per-share loss for 2021.
At the end of the third quarter, Beyond Meat had $886 million in cash and $1.15 billion in long-term debt. Still, with a market cap of $3.75 billion, you’re paying about 8 times revenue for a money-losing company growing annual revenue at just 14%.
Beyond Meat’s Popularity Not Helping BYND Stock
Despite its financial troubles, Beyond Meat continues to attract big partnerships and positive analyst coverage.
McDonald’s (NYSE:MCD) partnered with Beyond Meat for its McPlant burger. The fast-food chain began testing it in November, and it is selling better than expected. The privately-owned Panda Express chain is testing out two dishes with Beyond Meat’s “beef.” And a joint venture with PepsiCo (NASDAQ:PEP), which I praised a year ago, is expected to deliver a faux jerky this fall.
Meanwhile, rival Impossible Foods hopes to go public soon. The company is reportedly trying to raise $500 million, which would bring its valuation to $7 billion. A $10 billion valuation through a special purpose acquisition company merger was also discussed before the SPAC market cooled. Given this and investors’ disappointment with BYND stock, I’m guessing these valuations are a bit rich.
Despite the poor performance of BYND stock, it continues to garner positive analyst coverage. For instance, Barclays analyst Benjamin Theurer recently gave it a double upgrade, raising his rating from “underweight” to “overweight.” He also upped his price target for shares to $80, which is 35% above the current price.
“We believe Beyond Meat’s growth potential in the U.S. food service channel and the international segment is not properly reflected in the current stock price,” Theurer wrote.
Not all analysts who cover the stock are as optimistic as Theurer, though. According to TipRanks, the average price target for the 13 analysts covering BYND stock is $72.36. But that is still more than 10% above the current price.
The Bottom Line on BYND Stock
What investors didn’t realize when Beyond went public is that it has a lot of competition — both in the plant-based protein space and in the market.
In addition to Impossible Foods, companies like Kellogg’s (NYSE:K) are competing for consumers’ faux-meat dollar with brands such as Incogmeato and MorningStar Farms. There’s also Kraft Heinz’s (NASDAQ:KHC) BOCA products. And a startup called Black Sheep Food is raising cash for a plant-based lamb alternative.
Investors looking for another way to play the growing popularity of the plant-based protein trend can turn to US Vegan Climate ETF (NYSEARCA:VEGN). It’s up 10% over the past year compared to a loss of 65% for BYND stock.
Fake meat is a growing, innovative and very competitive industry. Its success won’t be determined by the fate of Beyond Meat. Beyond had first-mover advantage in its market, but so did Yahoo.
On the date of publication, Dana Blankenhorn held a long position in PEP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn.