10/11/2023 0 Comments Beyond meat stock yahooMargins sing to the same tune and have been compressing for a while. This is already coming into play in pricing as noted above and in management commentary citing loss of market share. Competition is a determining risk to Beyond Meat's long-term growth and profitability. The barriers to entry in the category are very limited and Beyond's competitors are fierce competition has effectively infinite resources and extremely wide distribution. Even if it has the product lead today, which arguably it doesn't, or at least not by a wide margin, it may struggle to hold its leadership. Beyond Meat enjoys an early mover advantage but I don't believe that this advantage means much. The category isn't attractive even if the demand picked back up over time. Industry Structure may Put Future Financials in Question Poor demand with price decreases in such an environment speaks loudly, in my view. Beyond Meat won't easily find a better environment to raise prices in with high food inflation with soaring meat prices as live and feeder cattle prices rapidly increase. ![]() We're seeing pretty much all companies raise prices due to increasing costs from labor shortages, supply chain issues, and increasing commodity prices. Decreasing pricing is worrying even in the best of times but is extremely so today when pricing power is crucial. According to the management, the reason was increased discounts. Beyond's net revenue per pound was down 2% YoY in US retail. I believe that this announcement could be foreshadowing a different future for faux meats.īeyond Meat's results tell the story I'm implying. Canada's Maple Leaf Foods ( OTCPK:MLFNF) recently announced that it is reviewing its plant-based foods expansion strategy following it seeing a marked slowdown in the category which may suggest a systemic change in the industry's fast growth rates. Beyond Meat seems to be alone in the issues it faces.ĭecreasing demand for plant-based products could very well be the problem. Healthy eating and fewer open restaurants led to more cooking at home. Consumers exercised more and ate more healthily. Contrary to their reasons, health awareness broadly increased during the pandemic. We may hear some disturbing announcements from the management in the quarters to come. Beyond Meat seems to be alone in experiencing these issues. Both Walmart ( WMT) and Kroger ( KR) cited healthy grocery demand as well as increased interest in healthy foods. The picture in the grocery space was similar. Oatly ( OTLY), The Simply Good Foods Company ( SMPL), and Freshpet ( FRPT) have all commented on a robust demand environment and continuing consumer preference for healthier options. Companies facing similar demand dynamics are performing well. This is inconsistent with the data we're seeing elsewhere and may be unique to Beyond's category. The management blamed fewer trips to grocery stores, less willingness to try new items, as well as less interest in eating healthy. I would fully understand poor performance in restaurant/hotel channels but the commentary regarding retail seemed illogical to me. The management blamed COVID as a reason for decreased demand. The most important issue facing the company is the apparent lack of demand. ![]() I think that the company faces critical issues that will continue to plague it at an increasing rate over the coming quarters. While many Beyond Meat believers may see the underperformance as an opportunity, I still see significant downside. The stock has been performing particularly poorly as of late. It underperformed the broader market since its IPO as its price is unchanged at current levels versus a 55% rise in the S&P 500 Index. Beyond Meat's Near-Term Future is Ominousīeyond meat has been performing poorly. I prefer to go with a bearish put spread. Naked shorts are dangerous, however, given the risk of a positive catalyst spiraling into a short squeeze. I see further room for price depreciation even considering the recent underperformance. ![]() The valuation is high compared to peers given growth and profitability metrics. The company's valuation or consensus estimates don't reflect the challenges it faces. The long-term growth and profitability are questionable. Competition is fierce and getting fiercer. The demand for the company's category is in question. Sundry Photography/iStock Editorial via Getty Images Investment Thesisīeyond Meat ( NASDAQ: BYND) faces multiple issues.
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