Beyond Meat bears have had a bad streak.
Shares of the fake meat maker have skyrocketed nearly 52% since this month, a massive gain buoyed by Main Street's meatless mania and a welcome reprieve from the stock's collapse in the second half of last year.
Shares fell 4% Wednesday morning, following a downgrade from Bernstein. Trading in the stock was halted briefly on Tuesday to mitigate volatility.
Beyond Meat has proved challenging for its short-sellers, who are currently short roughly 40% of the float but frequently find themselves caught in short squeezes.
A short squeeze is when investors who are betting a stock will go lower — short-sellers — instead see the stock rise and are forced to cover their bets, which can send the stock even higher.
For Bill Baruch, founder and president of Blue Line Capital and Blue Line Futures, the key level to watch in Beyond Meat is $70 a share. The stock was around $112 in early Wednesday trading.
"A close below 70 is very, very bearish," Baruch told CNBC's "Trading Nation" on Tuesday, pointing to the chart of Beyond Meat's stock since the initial public offering last May.
"In looking at this chart, this surge I believe has run its course," the technical analyst said. "This is not quite a dead-cat bounce, but this run, I think, is now exhausted and, ultimately, from here, you also have resistance at 135."
Based on Baruch's Fibonacci analysis — adopted from the mathematician who spotted repetitive patterns in nature that also tend to occur in the stock market — $135 is something of a ceiling for Beyond Meat's stock because it represents a 38.2% retracement of the recent downtrend, which is one of Fibonacci's key ratios, the analyst said.
"[If] you get a close above 135, it could get some legs," Baruch said. "I'm still not a believer."
Quint Tatro, chief investment officer at Joule Financial, said in the same "Trading Nation" interview that while Beyond Meat's story is "interesting," that's all it is: a story.
"From a fundamental standpoint, it's very difficult for us to get behind this name. It's not profitable. Exceptional sales growth, but pure speculation," Tatro said. "I'm a fan of the company. I've tried the burgers. I've tried the sausages. I mean, it's great. But from a fundamental investment standpoint, they've got to be profitable. They've got to have positive cash flow. It's just going to take time."
Tatro chalked up the stock's year-to-date surge to a "January effect," a Wall Street phenomenon during which the prices of the prior year's laggards are boosted as investors enter the new year with refreshed appetites for stocks.
"You've got some people that are buying that weakness, hoping maybe for a pop, which they're getting. Definitely, that's adding to the short squeeze, … there's no question," Tatro said. "But it's too soon to tell if this is a real turnaround or not. We would need several quarters of [an] improved track to profitability before we could ever be a buyer of this name here."
Profitability and positive cash flow were nonnegotiable factors for Tatro, who said his Kentucky-based firm would hold off indefinitely from buying shares.
"For those that are out there that have been trapped in this name and they're getting this bounce, it's a great opportunity to take some profits," he said. "If you're a long-term believer in this name, sit tight. See what happens. But from an investment standpoint, being able to put real capital [into Beyond Meat's stock]? It's very difficult for an investor to do here."