Beyond Meat priced its initial public offering at $25 and skyrocket 800% in less than four months. Beyond Meat, a maker of plant-based meat controls about 10% of the plant based meat market. And because they have achieved “first to market” they are the new IT THING on Wall Street.
But their valuation is beyond ridiculous. At the time, their valuation was higher than roughly 25% of the companies in the S&P 500 index. Then in July of last year, they announced they would be selling an additional 3.25 million shares of common stock which caused the stock to sell off 15% in August.
Then there was the lockup expiration event, at that time, roughly 75% to 80% of the outstanding stock was available to trade after the lockup expiration. Beyond Meat bottomed at the weekly demand at $81 and rallied after news came from China that they had to slaughter a huge portion of their pig herd and was seeing a surge in their meat substitute industry.
Beyond Meat reported earnings yesterday and the numbers were actually good. The company’s fourth-quarter sales of $98.5 million exceeded the highest analyst projection and helped push full-year revenue beyond expectations to $297.9 million. Gross profit was $33.5 million, compared to gross profit of $7.9 million in the year-ago period. Net loss was $0.5 million, compared to net loss of $7.5 million, a year-ago period. Beyond Meat also forecasted 2020 sales of $490 million to $510 million, also topping estimates.
But the stock still sold off the most in four months. Wall Street was expecting a small profit vs. the earnings per share loss of a penny. Although gross margins were 34.0% was in line with consensus, that was a decline from last quarter.
If I was an investor in Beyond Meat, I would be just focused on the top line and wouldn’t care about the bottom line assuming their profits were being reinvested in the business because as the CEO, Ethan Brown pointe out, Beyond Meat is in about 4% of the 650,000 restaurants in the U.S, referring to the low number as an opportunity for rapid growth.
Beyond Meat has continued to strike new or expanded alliances with big restaurant companies. Starbucks Corp. said Wednesday it will start selling a Beyond Meat Inc.-branded sausage item in Canada, following a January announcement that McDonald’s and Beyond Meat were expanding their partnership there.
While its research and development spending did not keep pace with its revenue growth, innovation remains core to the business, Brown said. Beyond Meat is planning product launches in food service and retail, while work on bacon and steak continues, he said.
The company expects to bring down prices as it tries to achieve price parity with meat, executives said on a call discussing earnings.
If Beyond Meat can get prices down to match meat, I think that would be a game changer for the company. In the meantime, price is back at the weekly demand at $81. However, the charts suggests is the weekly demand at $81 is breached, the next level buyers are expected to jump in is at the weekly demand at $63.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted via Steemleo