Is Beyond Meat (NASDAQ: BYND) a good investment? The meat alternative company has been growing at a rate that would make the most stoic vegetable farmer proud. Despite the coronavirus wreaking havoc on the stock market as of late, Beyond is still up nearly 400% since its $25 IPO last May and more than 30% in 2020 alone.
The one question on everyone's mind though is: will Beyond Meat's stock continue to rise?
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In what is becoming a rarity among newly-IPO'd companies these days, Beyond Meat is actually profitable. At its most recent earnings call in October, the stock plunged despite the fact that it had just posted its first-ever profit. This was made possible by the fact that revenue came in triple that of the previous year at $92 million, beating the $82 million target set by analysts.
Compare this with other high-profile stocks right now, such as Virgin Galactic (NYSE: SPCE) which reported less than $600,000 in revenue on losses of $55 million last quarter, yet has seen growth of nearly 200% in 2020 alone.
Investing is confusing sometimes.
Another bullish case for the meatless leader is its first-mover advantage, which has seen it enter into a number of promising partnerships, including Dunkin Brands (NASDAQ: DNKN), Subway, Del Taco (NASDAQ: TACO), Yum Brands (NYSE: YUM) owned KFC, and more. It has also seen a trial deal with McDonald's (NYSE: MCD) in Canada extended, and should it become spread across even just a fraction of its 40,000 or so locations, it would be massive for Beyond.
Finally, there is clearly an alternative meat revolution taking place across Western society, with Beyond Meat filling that market gap and leading the 'meatless revolution'. Plant-based penetration in the global meat market will steadily climb toward 10% over the next decade according to analysts, and possibly higher, with the industry expected to be worth nearly $28 billion by 2025.
Beyond Meat is facing some stiff competition to its brand, and not just from start-up Impossible Meats. Established companies such as Tyson Foods (NYSE: TSN) and Kellogg (NYSE: K) are already the biggest meat providers in the U.S., with billions to spend and proven success in logistics and distribution. They're also already working on meat alternatives. In February, privately held food giant Cargill also announced that it would be pumping $7 billion into the development of its own plant-based patties.
As well as this, Beyond has long struggled with 'meating' demand (I've used this joke in almost every BYND article I've ever written, and I refuse to stop now). Beyond suffered from this problem in 2017 or 2018, although CEO Ethan Brown stated last year that the company had resolved this issue. This will certainly be put to the test should more deals be put into place.
Another looming threat to Beyond is a little-known fraud suit that has been filed against the company's CFO, Mark Nelson, by a former partner, Don Lee Farms. The ongoing suit caused legal costs to rise 174%, according to the October earnings call, and with a trial date set for May 2020, the company could be in for an expensive year
Beyond's stock is a long-term winner that, a few months after its IPO, was overvalued and over-hyped. Since then, shares have lost more than two-thirds of their value, but the growth narrative has only gained momentum during this stretch, and the stock is still up nearly 400% since last May, and 30% this year.
The meatless revolution is only going to gain momentum and as the leading specialist in that sector, Beyond Meat could be poised to maintain its dominance, despite bigger-name competition.
Think back to when Netflix (NASDAQ: NFLX) wanted to disrupt how we consume content, against the might of cable television. We all know how that turned out.
It is made of a mixture of pea protein isolates, rice protein, mung bean protein, canola oil, coconut oil, and other ingredients like potato starch, apple extract, sunflower lecithin, and pomegranate powder with a range of vitamins and minerals.
At the company's last quarterly earnings report in October, Beyond Meat announced it was profitable for the first time.
Yes, Bill Gates was a substantial backer of the meatless burger maker, along with actor Leonardo DiCaprio.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Beyond Meat. Read our full disclosure policy here.
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