Pascal Shirley, CC BY-SA 4.0, via Wikimedia Commons
BYND | 4.05 | –0.61%
Some Background
Beyond Meat reported q4 and full year 2023 financial results on february 27th. The company reported net revenues of $343.4 million, a 18% decrease compared to the year prior and a net loss of $338.1 million, or $5.26 per share compared to $366.1 million, or $5.75 per share in 2022. The stock jumped at one point over a 100% after hours but quickly reducing the gains to just shy of 30% by end of the day. In the following days accompanied by exceptionally high volume and increased volitility shares have came back down to below $8 (as of 3/7/2024).
What Caused The Spike?
The numbers look bad, or at least you’d think so. despite higher than expected loss per share, which came in at $0.92 with $0.88 expected investors seem to have liked the news. following earnings release the CEO of Beyond Meat mentioned the company plans on drastically cutting on operational expenses and make better use of cash, of which Beyond has about 190 million according to their balance sheet (including cash equivalents). Beyond also expects revenue to range between $315 million and $345 million in the next year, indicating a sense of stability as the company plans to expand into international markets.
Expansion Into Europe And New Products
Taking a look at Beyond’s revenues by channel, we can quickly notice that while domestic revenue has fallen 32.3% compared to 2022, revenue from international sales grown by about 20%. They demand for plant based meat alternatives is growing very fast in Europe, according to a recent survey even 51% of meat eaters on the old continent claim they are actively reducing their meat consumption,
where the main reasons for that being health, environmental concerns and animal welfare. With Beyond Meat selling products such as McPlant, Beyond Steak, Beyond Chicken, and Beyond Pepperoni exclusively outside the US and recently releasing Beyond IV product line that promises to reduce the saturated fat in the products by 60% by shifting to avocado oil, although currently supposed to start selling in the US, would fit perfectly into what the market demands.
Competition
Tony Webster from United States, CC BY-SA 2.0, via Wikimedia Commons
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With a growing popularity of plant based meat, comes competition, likely one of the factors that influenced the downtrend in Beyond’s revenues. The most notable is Impossible food, a yet private company valued at $7 billion in 2021 that’s most known for it’s Impossible Burger and partnerships with big names like Burger King. Yesterday, also Craft Heinz announced together with NotCo a launch of plant based product line featuring NotHotDogs and NotSausages. Other important players in that area are: The Vegetarian Butcher (owned by Unilever) and Kellogg. There are many more companies trying to break into the industry but lacking funding for research and developement, which Beyond Meat clearly has.
Potential for a Short Squeeze?
As of February 15 there were 23.13M shares short, representing 39.13% of float and 35.79% of shares outstanding, which puts Beyond Meat in the top 20 most shorted stocks in the US. That brought the question of a possible short squeeze after the earnings. If the shorts were to start closing out their positions, this could significantly drive beyond’s stock price higher. that hasn’t yet happened and the stock is down almost 30% from the price at open the day after earnings.
Projections For The Future
In tandem with Beyond Meat’s strategic initiatives, the broader plant-based meat market anticipates remarkable growth, with a projected compound annual growth rate (CAGR) of 24.9% from 2023 to 2030. By 2030, the market is forecasted to reach a staggering revenue of $24.8 billion, up from 5.23 billion in 2023.
Summary
In summary, Beyond Meat’s Q4 and full-year 2023 financial results revealed a decline in net revenues and an increase in net losses compared to the previous year. However, investor optimism was sparked by the company’s plans to reduce operational expenses, optimize cash utilization, and expand into international markets, suggesting a path towards stability and growth. Despite facing competition from industry players like Impossible Foods, Beyond Meat remains well-positioned to capitalize on the growing demand for plant-based alternatives. Overall, while challenges persist, Beyond Meat’s dedication to sustainability and market expansion positions it as a key player in the evolving landscape of the plant-based food industry.
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