Beyond Meat Inc in a Billion-Dollar Market
Beyond Meat Inc (NASDAQ:BYND) is possibly the hottest initial public offering in 2019 and possibly the hottest stock on Wall Street. The meat substitute company’s share price has soared 734% since going public in May at $25.00 per share—an astronomical, eye-watering number, whether you slice it on the bias or not.
This has caused many investors to question whether or not Beyond Meat Inc, trading at $200.00 per share, is worth the high valuation.
But here’s the rub: the stock market is a forward looking indicator. BYND stock may appear to be on an out-of-control trajectory (which, like any excellent stock, will experience short-term profit taking), but investors are overlooking the company’s potential market.
Beyond Meat is one of the first alternative meat companies out of the gate, and it’s taken a commanding lead with rave reviews and massive market penetration. Best of all, the alternative meat market has ginormous potential; over the next decade, the substitute meat market is expected to top $140.0 billion. (Source: “Alternative meat to become $140 billion industry in a decade, Barclays predicts,” CNBC, May 23, 2019.)
BYND Stock Overview
Beyond Meat Inc is one of the fastest-growing food companies in the U.S, producing plant-based burgers, sausage, crumbles, and more. Unlike traditional vegetarian meat substitutes, Beyond Meat’s products do not contain glycerol monostearate, soy, or gluten; instead, it is made from plant-based ingredients. (Source: “Overview,” Beyond Meat Inc, last accessed July 23, 2019.)
The El Segundo, California-based company’s brands include “Beyond Beef,” “Beyond Burger,” “Beyond Chicken,” “Beyond Meat,” “Beyond Sausage,” “The Cookout Classic,” and “Eat What You Love.” Its products are available at more than 30,000 retail outlets around the world.
Restaurant companies using Beyond Meat products include A and W Revenue Royalties Income Fund (OTCMKTS:AWRRF, TSE:AW.UN), Restaurant Brands International Inc (NYSE:QSR), Del Taco Restaurants Inc (NASDAQ:TACO), CKE Inc., TGI Friday’s Inc, LMP BurgerFi Holdings, LLC, Bareburger Group LLC, and The Veggie Grill, Inc.
BYND Stock Information
|Market Cap||$12.6 Billion|
|Shares Outstanding||60.1 Million|
|50-Day Moving Average||$158.51|
|200-Day Moving Average||$128.42|
(Source: “Beyond Meat, Inc. (BYND),” Yahoo! Finance, last accessed July 23, 2019.)
BYND stock, fueled mostly by investor optimism and decent financial results, popped on June 6 after the company reported first quarter revenue of $40.2 million; a net loss of $6.6 million, or $0.95 per common share; and an adjusted net loss of $0.14. Investors were pleased with those numbers and the company’s optimistic outlook.
Since then, Beyond Meat stock has continued to climb steadily higher. On July 22, the company’s share price hit a new high of $208.48. Chances are good that giddy investors will help it will trend steadily higher over the coming days.
Beyond Meat will be announcing its financial results for the second quarter, ended June 29, 2019, on Monday, July 29 after market close.
Chart courtesy of StockCharts.com
Alternative Meat Industry to Be Worth $140.0 Billion By 2028
There are lots of reasons why investors jump on the investing bandwagon, including the fear of missing out on the next big thing. This helps explain why the cannabis industry has been on fire (for the most part) since the middle of 2018. The marijuana industry is in its infancy and it’s going to be a massive industry.
The same can be said for the alternative meat industry. It’s very much in its infancy, but unlike the marijuana market, which has dozens and dozens of different publicly traded companies to choose from, the plant protein-based substitute meat industry is relatively sparse.
Yes, food giants like Tyson Foods, Inc. (NYSE:TSN) and Nestlé S.A. (OTCMKTS:NSRGY, SWX:NESN) offer plant-based products, but they are not a pure-play meat alternative company like Beyond Meat. And their stories are not as compelling.
Beyond Meat’s biggest competitor is Impossible Foods, which is being backed by Bill Gates, Hong Kong billionaire Li Ka-shing, and Khosla Ventures Fun III. However, it’s still a private company.
For now, investors excited about the alternative meat industry have their attention focused on Beyond Meat Inc. And that fulsome devotion is not without merit; the plant-based meat substitute market is going to be huge.
Today, the meat substitute market is pegged at $4.6 billion. Over the next 10 years, the market for plant-based meat is forecast to climb to $140.0 billion. This would translate into a 10% take of the $1.4-trillion global meat industry. It also represents a compound annual growth rate of 40.71%. No investor wants to miss out on that kind of growth. (Source: CNBC, op. cit.)
While it’s taken decades for someone to come up with a plant-based, alternative meat product that doesn’t taste like sawdust, thanks to today’s technology, it won’t take as long (or very long) for lab-based steak to hit grocery shelves and restaurant menus. The big question is, can they create a lab-based T-bone or porterhouse that can compete with the real thing?
And if they can achieve this, will companies like Beyond Meat be able to capture the biggest demographic that consumes meat, men aged 14 to 70? If recent history is any indicator, the answer is “yes.”
On June 6, Beyond Meat Inc announced that revenue for the first quarter of 2019, ended March 31, 2019, advanced 215% year-over-year to $40.2 million. Net losses came in at $6.6 million, or $0.95 per share. In the same period last year, Beyond Meat recorded a net loss of $5.7 million, or $0.98 per share. (Source: “Beyond Meat Reports First Quarter 2019 Financial Results,” Beyond Meat Inc, June 6, 2019.)
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was a loss of $2.1 million versus a first quarter 2018 loss of $4.3 million. Beyond Meat Inc ended the first quarter with cash and cash equivalents of $35.4 million and total outstanding debt of $30.4 million.
Looking ahead, for fiscal 2019, Beyond Meat expects to report revenue in excess of $210.0 million, which would represent year-over-year growth of over 140% and break-even adjusted EBITDA. (Source: Ibid.)
Beyond Meat Inc has been one of the most interesting stocks to watch in 2019, and not just because the meteoric rise in its share price. The company is interesting because it has a great story and is zeroed in on the burgeoning alternative meat industry.
Again, said industry is in its infancy and is going to be huge; plant-based protein has become increasingly popular and will, by all accounts, continue to grow. As the first real pure-play plant-based substitute meat brand out of the starting gate, Beyond Meat Inc has a huge advantage over its eventual competitors and is in an excellent position to take a huge bite out of the global meat industry.
BYND stock’s gains have been impressive, but the company is just getting started.