Beyond Meat isn't looking too appetizing right now.
On Monday, the alternative meat company reported mixed earnings results and announced a secondary offering only three months after its IPO. After the report, the stock was down nearly 15% in extended trading. Shares were recovering in Tuesday trading.
Here's what four experts think lies ahead for the stock:
Thomas George, president of Grizzle, said although there is a lot of competition coming for Beyond Meat, there's nothing like the real thing.
"Yeah, so this is a stock right now, you're looking at plant-based foods, where the penetration is 0.25%. So, you know, I think the classic Wall Street dog imponing, next quarter, next year, it doesn't really fit the mold for a company that's growing at nearly 300% revenue year over year. You're struggling to find any company of this size that can do that kind of revenue. So, what you really have to do is think big picture, think out 20, 30. This is, you're thinking like a vc [venture capitalist].You're thinking what's this landscape going to look like? And what kind of market share could it take out in 2030? We think this goes very much like Nutella, right? There are a lot of other competitors to Nutella, but there's really only one Nutella, right? So, from our perspective there will be three or four major players in this space. It will be a branded market, and the market share will be split among those players."
Kate Cox, editor at New Food Economy, figures Beyond Meat is doing well by experimenting with new products and expanding into new spaces.
"They've expanded capacity to meet this kind of demand over the last couple of months. But, who knows whether they'll be able to take down a huge partner, for instance, a McDonald's? Or a really big name in the fast-casual sector? Food service, I think they can handle. Retail, I think they can handle right now. It's why we're seeing regional roll-outs of products like the Beyond sausage sandwich that they launched with Dunkin' last week. They did it in 190 stores in Manhattan. That's a good conservative start, to see if they can get a product like that in a democratized chain store like Dunkin Donuts. You know, I don't think anyone is in the habit of saying we're not up to it. So, it'll be interesting to watch the next year or so where they go."
Regular "Fast Money" trader Brian Kelly, who is also the founder and CEO of BKCM, isn't ready to buy the stock at the current price but knows exactly when the time to buy is.
"If you're the investment banker or you're the selling shareholders here, which are venture capitalists, after basically [a] 700% mispricing, investment bankers don't have much of a choice. At $200 they should have priced this so much closer to $200 rather than the original IPO price. That's why they're allowing it to be unlocked. This is venture capitalists, you can't blame them for saying listen we need some liquidity in this. In terms of how it impacts the stock, they have a little bit more money to spend on expansion. I still think at these prices, I'm definitely not a buyer. There will be a time when the stock traders will say, you know, Beyond Meat is dead meat, and all those things. … And that's when you want to buy it."
Guy Adami, director of advisor advocacy at Private Advisor Group, said looking at the big banks on guidance is the easiest way to trade the stock.
"Typically, when something like this happens ... wherever they price this thing ... they being I think Goldman Sachs, JP Morgan, and one other bank, I'm not sure who it is — but see where it's priced. And at least it gives you something to trade against. ... Was it mispriced? You know, I don't know, at $200 a stake [it's a] $13 billion with a 'B' dollar company. I mean, I don't think anybody in their wildest dreams thought by July 29, this would be a $13 billion company. That said, if you're looking for as easy as it possibly can be, see where they price it on Wednesday, and use that to trade around.
Brett Thomas, co-founder and managing partner at CAVU, is bullish on Beyond Meat and sees the secondary offering as a positive.
"Whenever you have a great profit, and obviously with a $12 billion market cap or whatever it is this morning, [is] an unbelievable outcome so far, right? ... So, any wise investor would always trim along the way. … No matter how much long-term conviction you have, you always have to take something off the table. Right? I actually think the secondary is a good thing. ... It increases the float in this company, right? It makes it a little bit more investable. … Meat is the biggest category in food ... It's $1.4 trillion. If you use the same logic in plant-based dairy, right? Capture about 15% of the dairy market. You know, UBS put a note out the other day, and by 2030, they think it's an $85 billion market in the U.S."
RJ Hottovy, senior restaurant and retail analyst at Morningstar, said the biggest takeaway from the earnings report is that Beyond Meat has done a remarkable job at building its brand.
"There is a ton of people getting in the market. We're seeing mixed response in terms of repeat rates from consumers right now. The company talked about, you know, being 40% first-time buyers continuing to buy the product. You know, that being said, I think the takeaway from last night's earnings is that Beyond Meat has done a great job building out its brand. It's become the preferred brand for restaurants in terms of plant-based proteins right now. They're building out supply, which is a key issue for a lot of these vendors. ... So all together, mixed results, but generally speaking I think the takeaway is Beyond Meat is still the clear winner in this category."
Dan Gluck, managing partner at Powerplant Ventures, figured that if Beyond Meat keeps investing in their operational facilities, there is a lot of room for growth.
"By our analysis, we think this can be about $100 billion total addressable market, and we think Beyond Meat needs to take only a small percentage of that to be able to grow into its current valuation. And I think that's what the market is currently underwriting right now. They're investing heavily into their operational facilities. I think on the call last night, Ethan [Brown, Beyond Meat CEO] mentioned that they will be able to handle at least $400 million of demand just next year alone. So they're continuing to invest in technology and innovation, and I think they're going to continue to be able to meet the increase in demand."
