Long-term investing is generally the best way to earn life-changing returns in the stock market. But unfortunately, some stocks stay the same no matter how long you wait for a change. About 99% of shares have fallen below them Initial public offering (IPO) in 2019, Beyond the flesh(NASDAQ: BYND ) Definitely falls into that category.
And while the equity may seem like a good deal at just $0.76 per share at the time of writing (down from an all-time high of $234.90), investors shouldn’t take that option. Let’s discuss three reasons why beef stocks can fall further.
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Public stocks exist to generate income for their shareholders. And even highly leveraged companies can become irrelevant if investors lose faith in their ability to create a path to profitability. Beyond Beef’s third-quarter earnings show things are headed in the wrong direction.
revenue Revenue fell 13.3% year-over-year to $70.2 million, driven primarily by the weakness of all of its sales channels and the withdrawal of customers from the Chinese market due to lower demand. But the U.S. business beyond meat isn’t doing so well with domestic food service (where it’s sold to restaurants) down a significant 27.3% over the period. Meanwhile, operating losses rose from $30.9 million to $112.3 million.
A deterioration of the top line beyond the meat is a red flag because the company has historically been viewed as a growth stock that will need to turn to profitability. This is obviously not happening anytime soon. and recommend the amount of these operating losses Bankruptcy An ending could be on the table, though management has vehemently denied the rumours.
The real problem beyond the meat is that it sells a product that consumers simply aren’t very fond of these days. A decade and a half ago, plant-based proteins were all the rage because of their potential health benefits and environmental concerns — meat production alone is estimated to account for 15% of global greenhouse emissions. And simulated meat can reduce emissions by up to 77%.
However, this turned out to be a fad rather than a permanent change in consumer tastes. Basic restaurant partners beyond meat, such as McDonald’squickly dropped its offerings in many markets as retail sales stalled.
It found that while consumers were willing enough to try plant-based meats, they weren’t motivated enough to make these products part of their daily lives. The Washington Post suggesting that the problem may have more to do with a lack of credibility than with real meat. But a simple explanation could be that consumers simply don’t think the products taste very good. And this is a difficult problem to solve.
Beyond the meat it does not take the challenge. On the operational side, management pursues stress-reducing and cost-cutting measures to try to bring cash burn under control. And most importantly, they are trying to win back customers by reworking their brand identity.
This month, the company changed its name from “Beyond Meat” to “Beyond” as it expands its product line from plant-based meats to include protein drinks. If the pivot works, it could give the company much-needed diversification in a market that is expected to expand in the market. Compound Annual Growth Rate (CAGR) of 9.4% to USD 76.56 billion by 2032.
That said, the move beyond meat can be taken as a gentle admission that the alternative meat market no longer has attractive long-term prospects. Investors can expect the company’s core business to suffer negative growth and large losses. The company could face significant competition from established competitors in the protein drink market, such as Muscle Milk and OWYN – the latter of which is already targeting the vegan market.
While Beyond Meat may look remarkably cheap at just $0.76 per share, there’s still room for more downside.
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Will Ibefing has no position in any of the listed stocks. The Motley Fool has posts on and recommends Beyond Meat. Motley Fool has a disclosure policy.
3 Reasons to Sell Beyond Beef Stocks Before It’s Too Late was originally published by The Motley Fool
