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Beyond Meat: Shares Plummet As Americans Don't Swallow Plant-Based Burgers

By Haris Anwar/Investing.comStock MarketsAug 10, 2022 01:44PM ET
www.investing.com/analysis/beyond-meat-shares-plummet-as-americans-dont-swallow-plantbased-burgers-200628346
Beyond Meat: Shares Plummet As Americans Don't Swallow Plant-Based Burgers
By Haris Anwar/Investing.com   |  Aug 10, 2022 01:44PM ET
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  • Beyond Meat has slashed its revenue outlook as shoppers find plant-based options expensive
  • McDonald's Corp last month decided not to go ahead with a broader launch of Beyond Meat burger
  • There is limited visibility on BYND’s path to growth if Americans aren’t liking the taste of its plant-based meat

Once a Wall Street darling, Beyond Meat Inc (NASDAQ:BYND) seems to be in survival mode these days. The maker of plant-based meat is cutting costs and preserving cash as it struggles to increase sales in a highly challenging environment.

The share price of the El Segundo, California-based company shows how swift that fall from grace has been. BYND made its public market debut in May 2019 at $25 a share, becoming the world’s first vegan meat alternative to list on the U.S. stock market. Within two months, its stock soared to $234, giving the company a $14 billion valuation when its yearly sales were just $87 million.

It’s pretty much been downhill from there, however. The stock has fallen more than 80% since reaching that all-time high, and the company’s latest quarterly earnings aren’t doing much to soothe investor and analyst concerns about the future.

BYND Weekly Chart
BYND Weekly Chart

Beyond Meat cut its revenue outlook for the full year last Thursday, saying that shoppers prefer cheaper animal proteins amid a near four-decade high inflation rate. In a call with analysts, Chief Executive Officer Ethan Brown acknowledged that consumer buying patterns had shifted away from plant-based meat, which sells at a considerable premium.

His company now sees sales in the range of $470 million to $520 million for the full year. That’s from the previous range of $560 million to $620 million. Second-quarter sales of $147 million also missed Wall Street’s estimates.

Beyond Meat Earnings
Beyond Meat Earnings

Source: Investing.com


A Myriad Of Challenges

The current inflationary environment, however, isn’t the only factor behind the BYND downfall. The company is facing a myriad of challenges to fuel growth. The biggest one is the company’s struggle to bring new menu items to the market beyond its flagship burgers and sausages.

There are clear signs that American consumers aren’t attracted to plant-based meat options in a big way, a major blow to the company’s forecast that fake meat is a $35 billion opportunity.

McDonald’s (NYSE:MCD) last month decided not to go ahead with a broader launch of Beyond Meat products after concluding its U.S. test of a burger made with plant-based meat on a negative note. Sales for the McDonald’s test have been “disappointing,” according to BTIG LLC analyst Peter Saleh.

Another significant setback is in the multi-billion dollar pizza market, where Beyond Meat promised to bring fake meat in partnership with Pizza Hut, KFC, and Taco Bell. More than a year and millions of dollars later, none of the restaurants has permanently added a faux-meat menu item in the U.S. According to a report in Bloomberg, Taco Bell has yet to test Beyond’s “carne asada” in a single restaurant after the fast-food chain was dissatisfied with samples.

The result of these failures is that the company is now forced to preserve cash and reduce its cash burn rate.

Beyond Meat had $455 million in cash and cash equivalents on hand at the end of the quarter ended July 2, compared to the $548 million it had at the end of the first quarter. The company had $1.1 billion in outstanding debt at the end of the quarter.

In a recent note, analysts at Barclays said that Beyond Meat might have to raise a billion dollars in the coming year, given how fast it is going through cash. Their note also added that there is limited visibility on BYND’s path to recovery, especially when the company’s partnerships take too long to materialize.

Despite a massive plunge, analysts’ consensus on BYND’s share price shows a further downside risk. In an Investing.com survey of 20 analysts, 13 have a neutral rating, while five recommend selling with a consensus price target that implies a 27% downside.

BYND Consensus Estimates
BYND Consensus Estimates

Source: Investing.com

Bottom Line

Beyond Meat’s growth story is becoming hard to believe when its sales are falling, labor costs are rising, and the partnerships with global food chains aren’t producing the desired results. BYND needs a major turnaround to attract investors again.

Disclosure: The writer doesn’t own BYND stock.

***

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Beyond Meat: Shares Plummet As Americans Don't Swallow Plant-Based Burgers
 

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Beyond Meat: Shares Plummet As Americans Don't Swallow Plant-Based Burgers

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Comments (16)
jda trading
jda trading Aug 12, 2022 9:17AM ET
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BYND products are highly processed. Consumers of plant based goods are more aware of such and know its basically ******
Fernando Saldanha
Fernando Saldanha Aug 12, 2022 9:17AM ET
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Exactly. Most vegetarians avoid eating processed foods.
Sven Vranken
Sven Vranken Aug 10, 2022 11:42PM ET
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Since forever i am trying to get my hands on a bynd mc plant. But none of the restaurants i have visited have this product. In the meatless products i am sure bynd is the best in taste and structure. We buy it when it is available. I rather cook spaghetti bolognaise with bynd instead of meat. Kids love it too. So i hope there is a future for this company.
Ralph Merry
Buzzed Aug 10, 2022 10:10PM ET
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The moat for the product is much smaller than most young companies experience. There is several competing companies in the arena and their's shows up with the highest price tag. The number of vegetarians in North America is growing as are the companies offering products.
Dan White
Dan White Aug 10, 2022 8:03PM ET
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Vegans don't want products that look or taste like meat.
Ralph Merry
Buzzed Aug 10, 2022 8:03PM ET
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Beyond meat isn't vegan
Scott McDonald
Scott McDonald Aug 10, 2022 5:44PM ET
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Wonder if klaus Schwab eats this garbage? Bill Gates must. He looks pregnant
Jim Hernandez
Jim Hernandez Aug 10, 2022 5:33PM ET
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not sure what these vegan companies are adding to their fake burgers, but the one I had at BK is bad at best. I am very suspicious of what chemical they are putting in these foods... for now, I'm gonna pass on grass... Iol
Joseph Obrzut
jzut Aug 10, 2022 4:35PM ET
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If I'm gonna have a hamburger I want nice greasy actual meat. We were put on this earth to do 2 things. Procreate. Eat. So if I'm gonna eat I want to enjoy it. :)
Martijn WN
Speculeerbeer Aug 10, 2022 4:35PM ET
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Spoken like a true American. You want a gallon of Coke with that, sir?
Supa Sillad
Supa Sillad Aug 10, 2022 4:35PM ET
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Lmao
Joseph Obrzut
jzut Aug 10, 2022 4:35PM ET
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Martijn WN LOL. Well not a gallon :) but with that delicious greasy burger that or a cold beer definitely go with it.
Joseph Obrzut
jzut Aug 10, 2022 4:35PM ET
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Martijn WN   LOL Well not a gallon :) but with that greasy burger that or a cold beer definitely go with it.
Johnny Crash
Johnny Crash Aug 10, 2022 4:04PM ET
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Hahahaha. Beyond Meat is just gross, it's filthy and disgusting trash
Kris Jay
Kris Jay Aug 10, 2022 3:23PM ET
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dont think that's the reason.  I buy impossible burgers every day.  the problem with beyond meat is its an inferior product.  doesnt taste like meat.   plant based burgers are great just not beyond meat.
Johnny Crash
Johnny Crash Aug 10, 2022 3:23PM ET
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A burger is not 'plant based'
Bolseiro Bilbo
Bolseiro Bilbo Aug 10, 2022 3:21PM ET
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Go vegan
 
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