Beyond Meat (NASDAQ: BYND) stock has experienced a wild ride over its trading history. The stock of the plant-based meat producer, which almost reached $240 per share soon after its May 2019 initial public offering (IPO), now sells in the $6 per share range as of the time of this writing.
Moreover, the stock's most recent earnings report showed a trend of continuing declines as consumption decreases. Considering the deteriorating business conditions, does this mean a comeback is out of the question for the food stock? Let's take a closer look.
The state of Beyond Meat
Investors and consumers alike were once excited about Beyond Meat's new offering, a meat-like product made from plants. This means consumers could presumably enjoy a vegan food product that provides a meat-like experience without the environmental and health effects involved in producing and consuming meat based on animal proteins.
Initially, Beyond Meat benefited from rapid growth as consumers took to its Beyond Chicken Strips. Initially, the product sold well, and even though it was later discontinued, that product led to the company introducing beef and pork substitutes as its product line expanded.
Moreover, Beyond Meat has moved beyond the grocery store, with several restaurants offering meals made with the company's plant-based meat. For example, TGI Fridays offers a Beyond Meat cheeseburger, and some independent restaurants serve meals with the product.
Furthermore, unlike rival Impossible Foods, which has remained private, Beyond Meat offered an opportunity for stock investors to invest in the plant-based meat industry by going public.
After its launch at $25 per share, the stock quickly surged. When the stock later pulled back, Beyond Meat kept investors interested through rising international sales, which began in 2020. This strategy took its product to over 80 countries worldwide.
Unfortunately for Beyond Meat, consumers appeared to lose interest, and over time, falling sales levels began to also affect its foreign markets. Consumers seemed increasingly leery of the high prices for the meat substitute, and some studies questioned whether its product was truly a healthy alternative.
Consequently, the number of retail and food-service outlets offering Beyond Meat products has fallen to 130,000, down from 144,000 in the year-ago quarter.
Beyond Meat by the numbers
Although that drop may not appear to spell doom for Beyond Meat, its declining numbers took a huge toll on its financials. In the first two quarters of 2024, revenue was $169 million, dropping 13% compared to the same quarter last year.
Still, the company lowered the cost of goods sold and operating expenses by a greater degree than the revenue decline. That helped the net loss for the first half of the year fall to $89 million versus $113 million in the same year-ago period.
Nonetheless, a profit is likely unreachable without revenue gains, and Beyond Meat is running out of money. Its cash position is down to $145 million, leading to questions about how long it can sustain its current pace.
Moreover, considering its $1.1 billion in convertible senior notes, it may struggle to take on additional debt. Also, with the aforementioned $6 per-share stock price, adding further to the share count of 65 million in outstanding shares would further diminish potential stock-price growth.
Avoid Beyond Meat
Ultimately, while it is presumptuous to call Beyond Meat stock "beyond repair," it has no obvious path out of its vicious cycle.
Plant-based meat could continue to appeal to some consumers. Nonetheless, the product has existed long enough that the novelty appeal has likely passed, even in its international markets. Since a large segment of consumers perceive it as too expensive (or possibly unhealthy), the revenue declines could continue, placing further financial strain on this troubled company. With its problematic situation making a recovery increasingly unlikely, investors should probably sell this stock before it falls further.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat. The Motley Fool has a disclosure policy.
