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Proprietary Data Insights Financial Pros’ Top Packaged Foods Stock Searches in the Last Month
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Is Beyond Meat Beyond Saving? |
Beyond Meat (BYND) patties taste great. They just aren’t great for you. What you give up in cholesterol, you make up for with copious amounts of fat. Like any diet trend, the alternative meat patty seems to have fallen out of favor. Beyond Meat faces lower demand, eroding already abysmal margins. Things are starting to look so bad, our Trackstar data suggests financial pros may be betting against the company. Here’s why. Beyond Meat’s Business Meat makes up far more of our diets than it should. The excess contributes to heart disease and takes an ecological toll. Beyond Meat wanted to change that with a meat alternative that tasted like the original. While not identical, Beyond Meat’s patties are delicious. However, the large amount of fat in the product offsets many health benefits consumers sought. That caused revenues to decline substantially, with excellent international growth failing to offset plunging U.S. demand.
Source: Beyond Meat Q3 2023 Investor Relations Shares that once traded at over $200 now trade below $9. Many question whether Beyond Meat will survive, given its negative cash flow, heavy debt load, and growing competition. Financials
Source: Stock Analysis Revenues grew spectacularly until 2022. The initial boom ran into reality as similar products hit the market, leaving Beyond Meat with almost no value proposition. It couldn’t explain why it was different or better than others. As sales collapsed, profitability did as well. Once positive gross margins turned negative. Yet, it’s worth noting that Beyond Meat never generated positive cash from operations, even during its best years. Investors eventually wised up to this and began dumping shares in earnest in mid-2021. Although $1.2 billion in debt might not seem like much, it’s more than it can handle. And given the $218 million in cash on hand, we expect Beyond Meat will need to raise capital in the next year. Valuation
Source: Seeking Alpha Compared to established packaged goods companies, Beyond Meat looks like it’s beyond hope. Every major competitor generates positive cash from operations at a minimum. However, we also wanted to show Oatly (OTLY), another diet fad company that held the spotlight for a short time. Like Beyond Meat, Oatly burns through cash and will likely need to raise capital in the next year. Growth
Source: Seeking Alpha Beyond Meat may have survived had it continued to grow. Yet, the decline in demand over the last 3-years is too much to ignore. These companies live and die by operational efficiency. Lower demand means capital equipment sits idle, tanking profitability. Profitability
Source: Seeking Alpha And it’s profitability that will ultimately undo Beyond Meat. Companies can survive sales drops, but only if they can adjust operations accordingly. Since Beyond Meat has never turned a profit, the chances of them figuring this trick out before the bank comes calling is slim. Our Opinion 0/10 We expect Beyond Meat to go bankrupt or get purchased by private equity eventually. The brand has some value. But the operations are broken beyond repair. If you own this stock, you do so at great risk. |
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