The Beyond Meat Inc (NASDAQ: BYND) stock price surged 34.64% in the past week as investors flocked to the company following a new distribution contract between the plant-based meat alternatives company and regional grocery chains such as Whole Foods.
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The company recently introduced its Beyond Steak, which has attracted a lot of attention from consumers, following rave reviews from those who have bought and consumed the product. However, the hype from introducing the new product is insufficient to fuel a sustained uptrend.
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In the past, we have seen BYND stock rally higher once a new product is introduced, such as when the company introduced its famous Beyond Sausage products. Still, such rallies have never translated into long-term gains, and the recent rally is likely no different.
Beyond Meat is yet to generate a full year of profit despite its IPO in 2019, and the company is nowhere near becoming profitable, leading to muted investor interest in the firm. The meat alternatives company has lost its investors a lot of money from a peak valuation of $4 billion in 2019 to its current valuation of $1.13 billion.
The company has more fundamental problems, such as its low gross margins, which turned negative in 2022 compared to 25% in 2021 and 30% in 2020. Still, the company's gross margins improved to 6.7% in Q1 2023, driven primarily by some accounting functions.
As a loss-making entity, Beyond Meat had a limited cash runway of $258.6 million at the end of Q1, marking a decline from the $310 million it had at the end of 2022. The company also had a massive debt burden of $1.1 billion, which could prove problematic once it is due.
The meat alternatives company is also facing other macro headwinds, such as the maxing out of much of its distribution network since it has signed deals with all the leading retailers. The company tends to maintain high inventory levels as its stock moves slowly.
Beyond Meat’s prospects remain uncertain as it has no clear path to profitability.
*This is not investment advice.
Beyond Meat (BYND) stock price.
The Beyond Meat (BYND) stock price has risen by 34.64% in the past week as investors bought its shares.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.