Beyond Meat, a producer of plant-based meat substitutes, now has its products available for purchase at dozens of major American fast-food chains and grocery stores across the country. Its products, which are designed to imitate chicken, beef and pork, have become a popular choice for those who aim to avoid eating meat.
Since going public in May 2019, Beyond Meat has partnered with Subway, KFC, Del Taco, Dunkin' Brands and more. And its shareholders have seen massive returns.
If you invested $1,000 in Beyond Meat at IPO, that investment would be worth nearly $4,500 as of Feb. 5, 2020, for a total return of around 345%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total return of around 14%. Beyond Meat has a current stock price of around $111.
While Beyond Meat's shares have done well over the years, any individual stock can over- or underperform, and past returns do not predict future results. Investors warn that this stock is likely to have many ups and downs ahead, which could make it a poor choice for investors with low risk tolerance. In fact, on Jan. 14, trading of Beyond Meat was briefly halted "due to volatility."
One high point: On Jan. 7, 2020, Beyond Meat stock surged 12.5% after its rival Impossible Foods dropped out of a deal with McDonald's, Reuters reports. Now, investors are banking on the idea that if a partnership between Beyond Meat and McDonald's expands, the alternative meat company's shares will rise to new heights.
CNBC: Beyond Meat stock as of February 2020.
Beyond Meat stock performance
When Beyond Meat went public in May 2019, its shares soared 163% on its first day of trading. However, just three months later, in July, the vegetarian-friendly business reported so-so second-quarter earnings, which sent its stock sliding nearly 15%.
This downward slump for Beyond Meat stock continued through the fall of 2019, but in January 2020, its shares rose more than 65%, thanks in part to the launch of the Beyond Sausage sandwich at Dunkin' locations nationwide. Its stock also saw a boost when Starbucks announced plans to add more plant-based items to its menu. And again, Beyond Meat's stock has undoubtedly been helped by Impossible Foods' decision to not work with McDonald's.
Still, on Jan. 28, JPMorgan made the decision to downgrade Beyond Meat stock from overweight to neutral. That's because JPMorgan believes the company's recent stock comeback is a result of media speculation surrounding the potential for an expanding partnership between McDonald's and Beyond Meat, which could unfairly sway investors to buy.
Investors are excited about the prospects of companies such as Beyond Meat, since it's expected that the alternative meat industry could win 9% of market share by 2040, which is about $240 billion in revenue, according to a 2019 report from Jefferies Financial Group.
What's Beyond Meat been up to?
At the end of January, the Los Angeles-based company announced that it would supply KFC with plant-based "fried chicken" at locations in Tennessee and North Carolina, starting in March.
However, Tim Hortons, a chain of coffee and doughnut shops, said in January it had removed its limited-edition Beyond Meat products from locations in the Canadian provinces of Ontario and British Columbia. Despite the menu change, a spokesperson for Tim Hortons said the company may start serving plant-based options again in the future.
Beyond Meat is also expanding its partnership with Denny's, an American restaurant chain. On Jan. 27, Denny's, which currently only serves its plant-based Beyond Burger at Los Angeles locations, said it will start offering the menu item at other restaurants across the U.S. and Canada. That same day, Beyond Meat's shares went up 4.4%.
If you are thinking about getting into investing, experts often advise starting with index funds, which hold every stock in an index, such as the S&P 500. Seasoned investor Warren Buffett agrees that it's a smart idea to start with index funds, in part because they fluctuate with the market, making them less risky than individually selected stocks.
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