Beyond Meat (NASDAQ:BYND) has lost 75% of its value in 2022 as faux meat continues to cost more than the real thing. At its height in 2020, BYND stock was trading near $200 per share. It opened today around $17.25 per share, but quickly fell to $16.86. That’s a market cap of $1.08 billion on estimated 2022 sales of $495 million.
The arrest over the weekend of COO Dave Ramsey, allegedly for biting someone’s nose at a college football game, merely added insult to the financial injury. Before joining Beyond in December, Ramsey was at meat producer Tyson Foods (NYSE:TSN).
Beyond Problems
Critics are blaming inflation for the fall of Beyond Meat. But the real problem is its failure to get costs below those of raising and slaughtering cattle. The average price for ground meat remains under $5 per pound, while Beyond patties sell for more than $8.
Beyond produces its product using pea protein, mung beans and brown rice in temperature-controlled plants. Coconut oil and beet juice give it meaty flavor and color. Its products are then delivered using refrigerated trucks. While it uses less water and land than beef, it uses a lot of energy and plastic.
During the company’s heyday, analysts said Beyond’s costs would remain higher than those for animal-based protein for at least five years. Consumers don’t appear willing to wait.
Beyond lost $97 million, or $1.53 per share, in the June quarter. Worse, sales of $147 million came up short of the previous year’s $149 million. Those numbers and a falling stock market have cut the stock’s price in half since they were announced.
What Happens Now for BYND Stock?
The arrest of Ramsey will make Beyond a punchline for comedians, but he’s not the company’s problem.
Until Beyond Meat — and its competitors — have costs competitive with those of cattle, faux meat will remain a niche product. Investors aren’t buying money-losing stocks with declining revenue, and consumers aren’t paying up in an inflationary environment.
On the date of publication, Dana Blankenhorn 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.
