Recent IPO and plant-based giant Beyond Meat (NASDAQ:BYND) has quickly gone from sizzling to scorched. But given what’s happening off and on the price chart of BYND stock, it’s time to put shares on the radar for buying. Let me explain.
In a year offering unicorns Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) and Pinterest (NYSE:PINS) to capture Wall Street’s imagination, none have seized investors’ wallets like BYND stock. Shares of the alternative or slightly disparaging ‘fake or faux meat’ innovator are up roughly 600% from its early May IPO price of $25.
But Beyond Meat has quickly gone from being red hot and hitting all-time-highs this past Friday to getting smoked by 28% in less than a week’s time. So, what gives?
BYND stock’s initial tumble followed Monday’s simply dazzling but ‘not meaty enough’ earnings release. Despite affirming Beyond Meat’s rapid growth and toppling Street views the report had the impact of raising valuation concerns. With investors worrying over Beyond Meat’s quarterly confessional, awareness of increased competition from Tyson (NYSE:TSN), Nestle (OTCMKTS:NSRGY) and still-private Impossible Foods might feasibly be threatening bullish investors wherewithal as well.
A second plate of ‘bad’ news came over the course of a few days following earnings. Beyond Meat announced a 3.25 million share, below-the-market secondary priced at $160. It also came with a bit of insider selling attached to the offering, which didn’t sit too well with BYND bulls.
At the end of the day, the actions taken by Beyond Meat’s management, as well as the modest insider selling are hardly surprising. As an innovative leader in this new market and given its stellar stock performance, Beyond Meat is simply looking to better capitalize on its growth trajectory while it’s in a position to do so.
And while Wall Street is having its hissy fit over BYND stock’s betrayal of sorts, that’s also business as usual and more theater for the cameras than a lasting grudge.
BYND Stock Daily Price Chart
What’s also unsurprising is BYND stock’s correction of 28%. The fact is most growth stocks, even in healthy market environments, will come under this type of pressure. As investors commonly use 30% as a benchmark for these kind of deeper pullbacks, it’s likely a better time to put shares on the radar for buying rather than selling.
On the price chart, BYND has broken trendline support. However, I’d take any bearish warnings tied to that failure with a grain of salt. My advice is to look for a bottoming candle to be confirmed on the daily chart over the next couple to few days.
Bottom line, based on BYND stock’s in-the-ballpark corrective depth, an oversold stochastics, shares approaching the 38% Fibonacci support level at $165 and slightly lower secondary pricing at $160 — that’s a smart approach to nibbling on shares while Wall Street has a temporary and anxiety-driven case of the runs.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.