When it comes to Beyond Meat (NASDAQ:BYND), and BYND stock in general, the pattern is all too familiar.
There is huge hype ahead of demand. But the revolution doesn’t happen. The bubble pops.
In 2017, it was bitcoin. In 2018 it was marijuana. Now, in 2019, it is vegetable protein dressed up to look, smell and taste like animal meat.
So what can we realistically expect from BYND stock?
Over the last four quarters, Beyond Meat has revenue of $166 million; its market cap before opening for trade Aug. 29 was over $9.6 billion.
It sure looks like a bubble. It smells like a bubble. It even tastes like a bubble. But could things be different for Beyond Meat stock?
BYND Stock: The Hype and the Hope
I would like to think things can be different for Beyond Meat. Meat production is decimating the environment. There’s a growing movement that’s in favor of making my late father-in-law’s birthplace in Texas into a petting zoo. For now, the land remains a cattle ranch. Last time we visited, one of the calves there was being called Henry.
Companies like Beyond Meat speak to this. With rival Impossible Foods still refusing to go public, BYND stock remains the only game in town.
Since its first trade in May at about $63 per share, Beyond Meat has been on fire, up 140%. In the quarterly report it has issued since going public, it reported an operating income of $3 million on revenue of over $67 million. That report missed earnings estimates by 16 cents a share. Analysts had expected a loss of just 8 cents.
Still, Beyond Meat has done its research. The research budget is down to $4.2 million/quarter. In June, it had $54 million in cash, and just $30 million in debt.
When Beyond Meat tested faux chicken near my home in Atlanta this week, it sold out within hours. If the test means anything, expect Kentucky Fried Chicken parent Yum! Brands (NYSE:YUM) to go all-in on fake chicken very soon.
Demand is there, as such companies as Restaurant Brands (NYSE:QSR), which owns Burger King, will attest. Beyond Meat is testing fake steak, even faux bacon. C’mon man. Bacon! The company’s suppliers are drawing new investment.
Meanwhile, skepticism is rising. And it’s not just from people like me who have seen this movie before.
No one believes the current valuation for Beyond Meat stock is justified. The bubble will pop at the first sign of an Impossible Foods IPO. With Beyond Meat costing $12 per pound, against $5 per pound for Henry, the bubble may have already burst.
The Bottom Line on Beyond Meat Stock
Personally, I hope the meatless meat bandwagon has longer legs than bitcoin or even legal pot had.
We have a Chinese restaurant near us that has been selling faux meat for decades and my best friend has been vegetarian for a half-century. The problem is that things like textured vegetable protein and seitan, sold in cans as mock duck, don’t really taste like meat.
I’m willing to believe there’s a big market for meatless meat that tastes like meat.
But the skeptics have a point, too. It would take years of solid, profitable growth for Beyond Meat to grow into its present valuation. At some point the market is going to find another new shiny object to chase. I don’t know what the catalyst will be, but after the fall (and only after the fall) I might take another look at Beyond Meat stock.
Until then, Henry’s future lies between two buns.
Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O’Flynn and the Bear , available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in QSR.