Beyond Meat (NASDAQ: BYND) shares went public via an IPO (initial public offer) in May 2019. Its IPO was priced at $25 per share, and BYND stock ended the first trading day at $66.79. It touched an all-time high of $235 in July and is currently trading at $63.76. So, an investor who purchased BYND stock after its IPO would have generated negative returns in this period, grossly underperforming the broader indices.
Let’s see if the pullback in Beyond Meat stock makes it a top investment at current prices.
The bull case for Beyond Meat stock
Beyond Meat is part of a rapidly expanding market. In fact, the retail market for plant-based meat is forecast to grow from $29.4 billion in 2021 to $162 billion in 2030. Beyond Meat initially enjoyed a first-mover advantage allowing it to boost sales from $32.5 million in 2017 to $406.7 million in 2020.
In addition to retail stores, Beyond Meat products are also available in quick-service restaurant chains such as McDonald’s, Starbuck, and Restaurant Brands International. In 2021, it entered into a three-year strategic partnership with McDonald’s, where Beyond Meat will be the sole supplier of plant-based meat products to the fast-food giant.
Beyond Meat’s product called the McPlant would first be tested in eight outlets in the U.S., after which it will be rolled out all over the country by the end of 2022. However, the nationwide rollout has been preponed and might begin in Q1 of 2022.
The bear case for Beyond Meat stock
While Beyond Meat has grown its top-line at a stellar pace until now, the company is currently wrestling with rising competition. Any expanding market attracts new players making it difficult to raise product prices and benefit from higher profit margins.
Wall Street expects sales growth to decelerate to 14.5% to $466 million in 2021. Analysts also forecast sales to rise by 38% to $643 million in 2022, on the back of its recently announced partnerships.
Beyond Meat stock is valued at a market cap of $4.03 billion, suggesting a price to forward 2022 sales multiple of 6.3x, which is steep for a loss-making company. Despite its double-digit revenue growth estimates, BYND’s loss per share is forecast to widen from $0.60 in 2020 to $1.77 in 2022.
So, should you buy BYND stock?
The massive pullback in share prices might make Beyond Meat attractive to contrarian investors. But Beyond Meat continues to trade at a premium, making it a high-risk bet, especially if the sell-off in growth stocks continues in the near term. The average 12-month price target for BYND stock is $72.4, less than 20% above its current trading price. There are several other companies that offer a far more compelling risk/reward profile.
Is Beyond Meat a public company?
Yes, Beyond Meat listed on the NASDAQ on May 3, 2019.
Does Beyond Meat pay dividends?
No, Beyond Meat does not pay any dividends to investors.
Is Beyond Meat profitable?
No, in the last 12-months, Beyond Meat reported an operating loss of $109.30 million.
Contributing Writer at MyWallSt
Aditya took an interest in the stock market during the financial crash of 2008-09. His favorite stocks include Roku and Apple as both companies enjoy a leadership position in their respective verticals and are poised to beat the broader markets consistently going forward.