Beyond Meat's once-sizzling stock is fizzling
Beyond Meat made headlines, and big bucks for investors and company insiders, earlier this year when it staged a blockbuster initial public offering. But the alternative protein company's shares have gone cold of late.
Beyond Meat's stock price closed trading on Wednesday at $97.90, down 58% since peaking at $235 in July. The main reason for that decline: competition. Food industry giants including ConAgra, Hormel, Nestlé, Tyson are crowding into the emerging plant-based meat market, which analysts estimate could reach $40 billion over the next decade.
Tyson, an early investor in Beyond Meat, in June announced that it would sell plant-based chicken nuggets, while in September Kellogg's said it's rolling out a number of "meatless meat" items. Kroger, the country's largest supermarket chain, also recently announced a new private label for alternative meat products.
Unshackling investors
Another factor weighing on Beyond Meat is the expiration on October 29 of the "lock-up period" on the stock following its May IPO. As of that date, executives at the company and private investors will be free to sell the shares they bought at a discount before the startup went public. About 48 million shares — some 80% of Beyond Meat's outstanding shares, are expected to free up, according to CFRA analyst Arun Sundaram.
And the incentive for those investors to sell is strong. Shareholders who offload their shares are likely to make a killing given that Beyond Meat's stock, while down in recent months, still trades about 293% higher than its public offering price of $25 per share. Beyond Meat CEO Ethan Brown fanned concerns about a sell-off when he sold shares at a steep discount in a July 29 secondary offering. The company's stock price promptly tumbled nearly 12% and has been on the decline ever since.
Longer term, by contrast, some analysts remain high on Beyond Meat, which they say is well-positioned as more consumers seek alternatives to meat.
"It is a valuable product category, and the product category will be more relevant in coming years," said Benjamin Theurer, senior analyst at Barclays. "I'd rather have a Beyond Meat in 10 years that will have a smaller share of a fairly large market, rather than a big player in a niche market that nobody else cares about."
