The meme stock halo fades as Beyond Meat is "brought back to reality" by dismal financial reports
After announcing preliminary results for the third quarter, the stock price of the plant-based meat concept stock Beyond Meat fell sharply. Revenue is expected to be around $70 million, a year-on-year decline of 13%, with a gross margin between 10% and 11%. Analyst Peter Saleh pointed out that persistently low gross margins and high operating expenses have suppressed the potential for profitability, maintaining a wait-and-see stance. Despite high brand awareness, declining sales and deteriorating financial conditions have offset the advantages, leading to weak sales growth prospects
According to the Zhitong Finance APP, the artificial meat concept stock Beyond Meat (BYND.US) has once again become the focus of the meme stock sector after announcing preliminary third-quarter results last week. Following a 23.06% plunge last Friday, Beyond Meat fell over 5% in pre-market trading on Monday.
According to the disclosed data, the company expects third-quarter revenue to be approximately $70 million, slightly above analyst expectations and in line with previous guidance. However, this expected revenue represents a 13% decline compared to the same period last year, highlighting the ongoing weakness in demand for its plant-based products.
Beyond Meat also expects a gross margin for the quarter to be between 10% and 11%, which includes $1.7 million in expenses incurred from suspending most of its operations in China. Operating expenses are expected to be in the range of $41 million to $43 million, of which about $2 million is non-recurring expenses covering legal fees, retention plan costs, and lease termination fees.
BTIG analyst Peter Saleh stated that the persistently low gross margins and high operating expenses have once again stifled the potential for profitability. In a recent report, he said, "We maintain a wait-and-see stance because we have not seen signs of a recovery in sales trends, the company has made no progress toward achieving sustainable financial health, and cash consumption may be worse than last year, while the recently completed convertible bond financing has led to severe equity dilution, indicating a challenging financing environment for the company."
Saleh and his team hold a neutral view on Beyond Meat's stock: on one hand, the company has high brand recognition and consumer acceptance of plant-based protein is increasing; on the other hand, declining sales, weak category demand in the U.S. market, deteriorating financial conditions, and potential funding needs offset these advantages.
Saleh warned, "Although the company has recently expanded its catering partnerships, very few products have become permanent menu items. Considering restaurants' hesitance toward large-scale or sustained supply of plant-based meats, we believe the time required for a rebound in sales growth may exceed expectations." Given the weak sales growth outlook, intensified competition, existing cash consumption issues, and uncertainties regarding additional financing, BTIG has assigned a "neutral" rating to the stock
