Beyond Meat Share Price Tumbles

Beyond Burger
Beyond Burger
(Beyond Meat)

On Monday when stocks shot higher on news Pfizer was close to having a COVID-19 vaccine ready for FDA approval, Beyond Meat was tanking. Reuters reports a company such as Beyond Meat needs two ingredients: “a product that sells, and the ability to manage investors’ expectations. The $9 billion beefless burger maker’s third-quarter earnings showed that it has enough of the former and precious little of the latter.”

Beyond Meat’s shares dropped 25% in Monday’s trading, and were another 20% lower on Tuesday. The problem? The company has told investors for weeks it was expecting to turn a profit – its first – in a quarterly earning statement. That projection was based on what the company said was “an enviable combination of consumer trends.”

On Monday, founder and Chief Executive Ethan Brown was forced to walk-back that prediction and said what the company had actually experienced was “a clear and prodigious pattern of consumer panic buying.”

Reuters called Brown’s comment “part of a double helping of ineptitude.” That’s because Beyond Meat’s shares took a hit when McDonald’s announced it’s own meatless burger, the “McPlant.” Beyond Meat says it is collaborating with McDonald’s but doesn’t say how, which leaves investors to speculate whether the McPlant is an opportunity or a threat. One frustrated analyst on Monday’s earnings call accused Brown of “spooking people” with a lack of substantial information.

Beyond Meat, which has a 52-week trading range of $48 to $197 per share, was trading at roughly $118 per share on Tuesday morning. The company boasts retail sales that are growing roughly at 40% per year, and more than half its customers are repeat buyers.

Yet, market analysts note that Beyond Meat was trading at 14 times estimated revenue before Monday’s selloff – double Facebook’s multiple. Reuters noted that “confidence in the growth of a young, one-product company is easy to puncture – say by a new source of competition, or unforeseen sales wobble. If Beyond Meat were just another division in a giant consumer-goods conglomerate like Unilever or Nestlé, such upsets would barely matter at all. That can’t be lost on the company’s hapless founder.”

 

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