Depending on who you ask, Beyond Meat (NASDAQ:BYND) stock is either a guaranteed winner or part of a total fad. In fact, it seems like there is rarely any in-between when investing in Beyond Meat stock.
As such, the Beyond Meat madness continued on Nov. 9, after the company reported disappointing earnings results. The stock is constantly rising and falling hard on whatever headline hits the print.
In this unpredictable environment, it’s difficult to find a semblance of truth. That has forced many investors to question whether BYND is a buy or a sell.
So, in light of these challenges, let’s develop a clearer long-term view on the fake-meat producer’s prospects.
What’s Going on with Beyond Meat Stock?
Beyond Meat experienced some surprising success earlier this year on better-than-expected sales of its faux-meat products. While the novel coronavirus was bound to put a dent in its profits from sales at restaurants, its future didn’t seem as glum after the first-quarter 2020 report. Of course, it’s hard to lose hope when you see an unexpected 141% increase in revenue.
The company reported that “an uptick in volume of product sold drove the revenue gains, as it expands distribution in the U.S. and abroad. ‘Higher sales velocities’ among retail customers also helped … [as did] a ‘lower net price per pound’ for products.” Some analysts were also optimistic about its “aggressive” plans to advantage the meat shortage caused by the pandemic.
So, regardless of pandemic concerns, Beyond Meat stock was on fire after the Q1 report — it seemed like nothing could stop it. Clearly, the idea of an increasingly meat-free future blinded many to the short-term challenges this year.
Fast forward a few months later, and the story isn’t as glamourous. Reality made a comeback and fell flat on investors’ heads this month. Beyond’s latest earnings report — filed just a week ago — was a massive dud. The stock tumbled more than 16% on the following day.
For all the initial hype about its ability to overcome the virus threat, the numbers told a much different story. Beyond reported only a 3% increase in revenue over the same quarter in the year prior. It also “reported a loss of $19.3 million, or 31 cents a share, vs. net income of $4.1 million, or 6 cents a share, in the year-ago quarter.” On top of that, uncertainty around its relationship with McDonald’s (NYSE:MCD) added a dash of salt to the wound. The fact that McDonald’s new “McPlant” product doesn’t include Beyond’s branding has raised questions as to whether their partnership is going smoothly.
All of this drove bears to bite down hard on Beyond Meat stock. But amid the day-to-day turmoil, the long-term case is seemingly forgotten by many.
Bottom Line on Beyond Meat
Yesterday, Beyond Meat stock climbed more than 3%. The headline this time? Product expansion in international markets. In other words, “‘Beyond Pork’ Is Next On the Menu!” And so, the endless rollercoaster of buying and selling continues. This time, Beyond is in the green.
But amid all of the madness, it’s important to remember one thing. Years from now, Beyond Meat stock will likely be worth much more than it is today. The real question is how much more?
The future is shifting in favor of meat-free diets. In fact, research suggests that by 2040, 60% of “meat” will be alternative meat products. On the flip side, the impact of the virus on Beyond is likely only temporary.
InvestorPlace.com contributor Luke Lango claims that “[the Covid-19] storm won’t last.” While the timeline is still murky, he’s right about that. Things will return to some kind of “normal” eventually.
Once the novel coronavirus challenges diminish, there will be plenty of room for Beyond to grow again. The pandemic-induced meat shortage also gave it a status boost as a household name among consumers.
However — while all of these are strong positives for Beyond Meat stock moving forward — there’s still reason to temper your expectations. Yes, the stock is bound to climb as the world becomes increasingly meat-free. But its competition is also bound to see plenty of success on this catalyst, too.
Until Beyond Meat establishes itself as the clear winner in the meatless movement, then, I’d suggest avoiding the extreme bullishness that has already declared it a winner. Still, the next time it takes a dip, it might be worth it to pick up a few shares.
On the date of publication, the author responsible for this article did not have (either directly or indirectly) any positions in the securities mentioned in this article.