Beyond Meat stock tumbles 17% as analysts worry about the company's long-term growth
- Beyond Meat's stock cratered 17% in premarket trading as analysts shared their doubts about the company's future growth.
- The company's third-quarter results disappointed investors, and a weak forecast for fourth-quarter sales didn't soothe worries.
- Credit Suisse analyst Robert Moskow wrote in a note that Beyond could be reaching market saturation faster than expected.
Beyond Meat's stock cratered 17% in morning trading Thursday as Wall Street voiced doubts about the company's growth prospects.
The plant-based meat maker reported disappointing third-quarter results after the bell on Wednesday. Its loss was wider than expected, while revenue fell short of expectations, even after a warning from the company last month. Beyond also issued a gloomy outlook that indicated sales wouldn't snap back immediately.
Jefferies called it "the quarter that likely broke the camel's back." Bernstein analyst Alexia Howard downgraded the stock, telling investors to not buy the dip.
"We view the results as further evidence that Beyond's business is reaching market saturation faster than expected and that the company has deeper problems that won't be easy to fix," Credit Suisse analyst Robert Moskow wrote in a note.
Beyond blamed a number of factors for its weak quarter, including severe weather, the delta variant and restaurants' labor challenges. CEO Ethan Brown told investors that the problems were largely short term.
However, analysts are more skeptical. J.P. Morgan's Ken Goldman quoted Maple Leaf Foods CEO Michael McCain, who told investors last week that the company is seeing a "marked slowdown" in the plant-based protein category, which could suggest a shift from the high growth rates expected by the industry.
"We are not yet sure who is right — Beyond Meat or Maple Leaf Foods — but when we hear commentary like this, it's hard to be completely confident about the future of the category," Goldman wrote.
Brown also said Wednesday evening that he's optimistic about 2022. But the company hasn't convinced analysts that's true. Bank of America Securities analyst Bryan Spillane wrote in a note that next year's results will depend heavily on the launch of McDonald's McPlant burger and its partnerships with other national chains, such as Yum Brands' Pizza Hut. McDonald's is currently conducting an operational test of the McPlant in a handful of U.S. restaurants and has begun selling the burger in a few international markets.
Spillane also said an area of concern is that U.S. trial and demand of meat alternatives has slowed, particularly in grocery stores.
Jefferies analyst Rob Dickerson predicted the stock will likely remain under pressure until there is a better understanding of plant-based meat's long-term development, consumption rates and the competitive landscape. Including Thursday's tumble, shares of Beyond have slid 38% this year, giving it a market value of $4.88 billion.
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