Is Beyond Meat a Buy After Meme Stock Surge? Analysts Say No
Beyond Meat (NASDAQ: BYND) had a great origin story. The company develops, manufactures, and sells plant-based meat substitutes designed to replicate the taste, texture, and appearance of animal-based proteins.
It was founded in 2009 to offer sustainable protein options by reducing reliance on livestock farming and its associated environmental impact.
It was an admirable goal. The company sought to address the agricultural industry’s runaway greenhouse gas emissions from methane and nitrous oxide while providing a competitively priced consumer staple alternative to beef.
Initially, the mission was endorsed by proponents of Environmental, Social, and Governance (ESG) investing as well as speculative investors. Following its May 2019 initial public offering (IPO), shares surged to an all-time high (ATH) of $234.90 that summer. Then, after a massive correction in late 2019 that carried into 2020, shares traded sideways until July 2021, when a sell-off began that the company has never been able to recover from.
Today, BYND trades for just $1.84—or 99.21% lower than the stock’s ATH. Beyond Meat has yet to achieve profitability and remains highly shorted among Wall Street’s bears. But earlier in October, the otherwise disregarded company began to grab headlines as it became the latest focus of a 2021-style meme stock short squeeze.
Beyond Meat’s Dire Financial Situation
When Beyond Meat last reported quarterly earnings on Aug. 6, it announced adjusted earnings per share (EPS) of -43 cents, which missed analyst consensus expectations of -37 cents. Quarterly revenue fell by 19.5% year-over-year (YOY) to just $74.96 million. That was also below analyst expectations of $85.71 million.
The earnings miss was nothing new. The company has yet to turn a profit, and declining sales and higher operating expenses have compounded those YOY figures. That grabbed the attention of Wall Street’s bears. Currently, short interest stands at an elevated 13.25% of the company’s float, which is nearly 31% higher than short interest was the month prior.
Two weeks ago on Thursday, shares of Beyond Meat closed at 52 cents, marking the stock’s lowest level on record. But that Friday, something changed.
BYND’s Meme Stock Rally
According to financial services firm Morningstar, on Tuesday, Oct. 21, more than 2 billion shares of BYND changed hands, a single-day record for the stock. For context, the average daily trading volume of Beyond Meat is 143 million.
That same day, 18.8 million BYND call options changed hands—also the most ever in a single day—while 645,000 BYND put options changed hands, also a single-day record.
By the time the market closed on Tuesday, Oct. 21, the stock had gained more than 596%. Similar to the GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC) rallies of 2021, Beyond Meat’s short squeeze rally led to several trading halts.
Despite the halts, the momentum continues. Joseph Saluzzi, head of equity trading at Themis Trading, told Morningstar that the heightened volatility in BYND trading has the hallmarks of a meme stock rally: elevated short interest, a weak underlying fundamental business, and a healthy dose of drama.
Some of that drama even included former “pharma bro” Martin Shkreli, who announced on X that he was increasing his short position in a big bet against Beyond Meat.
Beyond Meat Capitalizes on the Attention
Management at Beyond Meat didn’t rest on its laurels. Taking advantage of the company’s return to the limelight, it announced an expanded distribution deal with Walmart (NYSE: WMT), America’s largest grocery store chain.
That deal involves the availability of Beyond Meat products—including the new Beyond Burger 6-Pack, Beyond Chicken Pieces, and Beyond Steak Korean BBQ-Style—at more than 2,000 Walmart locations across the United States.
Additionally, luxury grocery store chain Erewhon, known for its high standards, celebrity clientele, and focus on organic and sustainably sourced offerings, is debuting the updated Beyond Burger and Beyond Beef with Clean Label Project certification.
Beyond Meat’s ability to announce those large-scale retail partnerships amid its meme stock rally has heightened investor enthusiasm despite the company’s ongoing financial troubles.
Should You Join Beyond Meat’s Meme Stock Rally?
However, short squeeze aside, there are plenty of reasons for shareholders to be concerned about the longer-term picture.
From Oct. 22 to Oct. 29, Beyond Meat has given back 48% of its gain as the stock remains incredibly volatile.
The company also recently announced it was swapping more than 316 million shares for outstanding convertible debt—an action that was dilutive to existing shareholders.
Beyond Meat currently receives a consensus Strong Sell rating from nine analysts covering BYND, none of whom assign the stock a Buy.
The average 12-month price target is just $2.08.
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