Beyond Meat (NASDAQ:BYND) stock fell slightly in premarket trading after it announced job cuts and the resignation of its chief operating officer.
Doug Ramsey, a former Tyson Foods (NYSE:TSN) executive, resigned weeks after an embarrassing incident where he allegedly bit someone’s nose after a college football game.
The layoffs amount to 19% of the staff as the company hopes to become cash-flow positive next year. At one point, the stock was down 10%.
BYND stock opened at about $14.70 per share, a market capitalization of about $940 million.
Before 2022, Beyond Meat was rewarded by the market for profitless growth, as revenue increased fourfold. This year the growth has stopped, and the stock is down by more than 75%.
In addition to the job cuts, Beyond Meat said sales for all of 2022 will fall below last year’s $464 million. The new guidance is for revenue between $400 million and $420 million.
Beyond Meat was built on the premise that consumers would like products that look and taste like meat but are made with plants. Its current product line includes hamburger, sausage and chicken analogs. The company is testing faux carne asada with Yum! Brands’ (NYSE:YUM) Taco Bell unit. It’s also rolling out faux beef tips and popcorn chicken with Albertson’s (NYSE:ACI) Jewel Osco chain. The Beyond Steak product is made with wheat gluten and fava bean protein. Fava beans are the main ingredient in the fake chicken.
The biggest problem may be that fake meat still costs more to produce than the real thing. Many consumers will pay the higher price in good times, but with food inflation running at 10%, that’s no longer true. The company said distributors had recently lowered their inventory levels and canceled promotions.
What Happens Next for BYND Stock
The Ramsey incident made Beyond Meat a laughingstock, but the company will get over it. The bigger problem is its cost structure, which it needs to bring into line with that of animal protein if it wants to return to growth.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.