Beyond Meat Falls Apart

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24/7 Insights

• Beyond Meat Inc. ( NASDAQ: BYND ) stock soared in its debut in 2019.
• Now it looks like the meatless trend was just another fad.

Beyond Meat Inc. ( NASDAQ: BYND ) stock soared in its debut in May 2019. Shares rose 163% on the first day of trading, posting the best first-day return since 2000. The theory behind the success was that Americans would move away from animal products because of a rise in the number of vegetarians and the effects of greenhouse gas emissions from cattle.

In the past few days, bondholders have begun looking for ways to salvage their investments. Beyond Meat is low on cash and may have to restructure. The Wall Street Journal pointed out that its convertible notes trade at 20 cents on a dollar. Restructuring is rarely good for common shareholders. Its stock has dropped 82% in the past two years.

Was It Just a Fad?

It seems consumers were not impressed.

In the most recently reported quarter, Beyond Meat said its revenue fell 18% to $75.6 million and it lost $54.4 million. It had lost $59 million in the same quarter a year ago. In its outlook, management said a possible recession, inflation, and high interest rates would affect its results. These were not the most important observations. Management also said it faced "ongoing, further weakened demand in the plant-based meat category."

Last year, Bloomberg ran an article titled “Fake Meat Was Supposed to Save the World. It Became Just Another Fad.” Turns out that people who were not vegetarians liked animal products better. It also turned out that plant-based meat was highly processed, taking away some advantages to consumers. A more troubling issue was that consumers never warmed to meatless meat.

Perhaps plant-based meat will have a resurgence someday, but Beyond Meat may not be around to enjoy the fruits of that change.

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