Amid an upbeat environment for the major indices, Beyond Meat (NASDAQ:BYND) provided some of the more shocking fireworks. Although the company delivered a rough set of results for its third quarter yesterday, BYND stock nevertheless jumped 20% in Thursday’s morning session. Likely, investors took encouragement at management’s pursuit of a more sustainable growth model.
First, on paper, no other way to characterize Beyond Meat’s poor Q3 performance existed. Per CNBC, the plant-based meat specialist delivered a loss per share of $1.60 against revenue of $82.5 million. In sharp contrast, analysts expected the company to post a loss of $1.14 a share on sales of $98.1 million. Further, net sales dropped 22.5% to $82.5 million.
In a rare executive admission, Beyond CEO Ethan Brown described Q3 as “disappointing” in a press release. As CNBC reported, “Cash-strapped shoppers are skipping Beyond’s burger, sausage and chicken substitutes and instead buying cheaper proteins, according to Brown.”
Per the Wall Street Journal, the fundamental narrative for BYND stock ran all over the map. “Beyond said its U.S. grocery sales declined 12% while sales to restaurants and other institutions increased 6% versus the year-ago period. It said its sales at international retailers fell 52%,” reported the news agency.
“The current economic climate has not been kind to plant-based meat,” added Brown.
BYND Stock Jumps on Turnaround Optimism
Despite some ugly numbers, BYND stock popped dramatically higher, likely on hopes of a turnaround. Management declared that it’s seeking “a more sustainable growth model,” per the WSJ. To accomplish this objective, Beyond undertook several initiatives, including reducing staff to cut expenses. From broader and sector-specific perspectives, this pivot might make sense.
Against the bigger picture, the major indices skyrocketed on Thursday on lighter-than-expected inflation. Presumably, the Federal Reserve is on track to meet its goals of controlling inflation, which would go a long way to supporting BYND stock.
Regarding plant-based meat industry dynamics, Beyond Meat enjoys a branding advantage. While individual tastes of course vary, the general consensus appears to suggest that people enjoy the underlying products. In addition, research reveals that young people gravitate toward plant-based food options.
While a debatable topic, much evidence indicates that Beyond Meat’s branding and products resonate with consumers. However, with the company’s products priced higher than the real deal, the post-pandemic new normal only exacerbated this pricing-versus-expectation mismatch.
Therefore, while layoffs typically hurt companies over the long haul, in Beyond’s case, it might help. That’s because current market conditions apparently impugn the pricing, not the product. Get pricing under control, and the consumers may start coming back, which may explain the rise of BYND stock.
On the date of publication, Josh Enomoto did not have (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.
