A less responsible financial commentator would have recommended that investors load up on Beyond Meat (NASDAQ:BYND) stock upon its May 2 initial public offering and hope for the best. That’s not how I operate, and I hope that you’re in the market for stable returns rather than lottery tickets.
The Beyond Meat stock price is higher than its IPO price, but there are plenty of underwater BYND investors hoping to at least break even. I’ll try to offer you some reasons for hope, but the ideal path forward is not one of reckless optimism but one of caution as the tale of the plant-based-food trend is still being written.
All Eyes Were on BYND Stock in 2019
Depending on your food preferences and your willingness to follow culinary fashion, you might have either loved or hated Beyond Meat in 2019. “Robust” (i.e., heated and expletive-filled) postings on message boards confirmed that BYND stock was indeed a hot discussion topic since its IPO.
To give you an indication of Beyond Meat stock’s volatility, the share price was initially announced at $25 but actually opened for public trading at $46, then powered its way to the $235 area within three months’ time. Obviously, this one doesn’t belong in your grandfather’s retirement portfolio.
Or, maybe it does — in small amounts. The process of price discovery, in which the market collectively decides on a stable, steady, sustainable price range for an asset, finally seems to have befallen BYND stock. From early November to the time of this writing, Beyond Meat stock appears to have found its range between $70 and $85.
Assuming that the plant-based-burger trend doesn’t implode and mindful millennials don’t latch on to some other health fad, I could see this price range holding up for a while. That being said, I can also envision young consumers ditching pricey fake-meat products if the apparently red-hot job market sours; in tough economic times, cheap McDonald’s (NYSE:MCD) burgers tend to mysteriously come back in vogue.
Keep Your Eye on McDonald’s and Impossible Foods
I’m okay with taking a small position in BYND stock now that the price has stabilized, but informed investors also need to understand the forces at play here. I’ll grant that BYND bulls were right to celebrate the company’s partnerships with Dunkin’ Brands (NASDAQ:DNKN) and Del Taco (NASDAQ:TACO) wherein Beyond Meat provides faux breakfast sausages and ground beef, respectively.
That’s all fine and good, but let’s not kid ourselves: in the realm of fast food, it’s all about Mickey Dee’s. I’m old enough to have seen attempts at healthier McDonald’s fare fail miserably, and plant-based burgers could be the next entrant into the McDonald’s menu’s hall of shame. A test drive of Beyond Meat patties in Canada is only the beginning, as the U.S. is the bigger burger market and it’s impossible to predict how unique American palates will take to apparently healthier burger patties.
Speaking of impossible, it’s also worth noting that when it comes to meatless meat, Beyond Meat isn’t the only game in town: Impossible Foods has been gaining traction among fake-meat aficionados and is threatening to steal market share in 2020. Competition was inevitable, but plant-based meat products remain a niche market and there might not be enough room in this field for two strong contenders.
The Takeaway on Beyond Meat Stock
If you want something safe and steady in this greasy, gluttonous U. S. of A., just buy and hold McDonald’s stock. If you have a taste for cult stocks with a little extra flavor, though — and if you’re prepared to accept that volatility could return anytime — then BYND stock is still on the menu.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.