Key points:
- Increasing competition is contributing to a tightening market
- Beyond’s rapid spending outweighs any path to positive EBITDA
- Nationwide McDonalids rollout may have less of an effect than initiaitlly perceived
With the growing popularity of plant-based diets came Beyond Meat (NASDAQ: BYND), a company enthralled in re-imagining the limited selection, availability, and range of vegan-friendly food. Many had high expectations for Beyond as an emerging industry leader, but a few years down the line; company fundamentals are drawing a slightly different picture. Despite exponential growth in supermarket products, promising partnerships with leading fast-food chains like Mcdonald’s and Burger King, and the development of a solid company brand, Beyond Meat doesn’t seem to be much further forward.
There are a few key problems that are tied to Beyond’s foggy landscape, as pointed out this morning by Piper Sandler analyst Michael Lavery. Firstly, market competition is continuing to rise as veganism and eco-centricity become increasingly viral trends. Whilst Beyond may have once been well positioned, the competitive intensity from rival companies is constricting the space that Beyond needs to grow and prosper effectively. Lavery pointed out the launch by Motif Foodworks as a key rival figurehead.
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Lavery outlined a further bearish fundamental in the company’s rapid spending, arguing that the company is on a cash spending spree with no evident path to positive EBITDA. The company seems set on lowering prices to below that of animal protein by 2024, even in the face of current inflation; which Lavery estimates will likely drive down prices more than increase product volumes.
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Finally, the hotly anticipated nationwide Mcdonald’s rollout may have more of a lackluster result than initially thought; there is still doubt surrounding the actual sales performance of Beyond products. All in all, Michael Lavery seems accurate in downgrading BYND stock this morning to Underweight from Neutral, slashing his price target from $50 to $29. Bearish fundamentals appear rife, with next to no reassuring financial guidance.