Beyond Meat (NASDAQ:BYND) marked one of the hottest initial public offerings (IPO) of 2019. That year, shares of BYND stock skyrocketed to as high as $239. From 2018 to 2020, sales of plant-based meat grew three times faster than animal meat sales. So, it seems like Beyond should be performing well, right? Sadly, that isn’t the case. Shares of BYND stock are now trading around the $65 level, down more than 70% from its all-time high.
BYND stock is currently the most shorted company in the Russell 1000 Index. The index tracks the top 1,000 companies in the U.S. stock market based on market capitalization. As of Jan. 10, short interest tallied in at 42% of BYND stock’s freely traded shares, according to S3 Partners. In addition, short positions on BYND have increased by 40% since October.
In the third quarter, Beyond’s U.S. sales shrank nearly 14%. The decrease in sales was driven by a downtick in demand for fake meat, labor shortages, supply chain issues and weather damages to its Pennsylvania production facility. Looking forward to Q4, investors aren’t so confident either. The fake meat company guided for Q4 revenue between $85 million and $110 million. The lower end of that estimate represents a year-over-year (YOY) decline of 17%, while the upper end estimates a YOY increase of 8%. This guidance encompasses a wide range, which signals that Beyond Meat is unsure of its prospects. That doesn’t sit well with investors.
Of course, Beyond did collaborate with Yum! Brands’ (NYSE:YUM) Kentucky Fried Chicken (KFC) recently to test out plant-based fried chicken and chicken nuggets. And this isn’t the first time that the two companies have teamed up. From 2019 to 2020, KFC tested out Beyond Meat products at select Atlanta, Nashville and Charlotte locations. In Atlanta, the Beyond Meat fried chicken “sold out in less than five hours.”
BYND Stock: Is Beyond Meat Environmentally Sustainable?
Fans of environmental, social and governance (ESG) investing have a bone to pick with Beyond, though. Why? Because Beyond Meat and rival Impossible Foods have yet to prove that they produce lower emissions than their traditional meat counterparts. Furthermore, Beyond burgers contain five times the amount of sodium when compared to plain ground-beef patties. That doesn’t exactly look like a healthy alternative.
Roxana Dobre, a manager of consumer goods research at ESG ratings firm Sustainalytics, added the following:
“The problem with plant-based products, generally speaking, is that while they may be fixing one problem, combating the fact that growing meat is very carbon intensive and emits a lot of carbon dioxide, depending on the ingredients and where they are sourced from, you could still be involved in deforestation issues.”
Clearly, it looks like BYND stock has some issues to work through moving forward.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.