Daily Management Review

Beyond Meat Shifts Trajectory After Falling Below Its IPO Price In Volatile Trading


Beyond Meat Shifts Trajectory After Falling Below Its IPO Price In Volatile Trading
After starting below their initial public offering price for the first time on Thursday following the vegan meat maker's larger quarterly loss, shares of Beyond Meat reversed course to gain as much as 12 per cent in wild trading.
Shares fell as much as 22% to a record low of $20.50, well below the IPO price of $25 in 2019. Several times throughout the first hour, trading in the stock was halted.
Beyond Meat was up 7 per cent at 10:58 a.m. ET, matching the larger market, which had reversed course to trade higher.
Beyond Meat's fortunes have plummeted in recent quarters as it battled increased competition and skyrocketing inflation, prompting Wall Street to worry about the potential of the company needing more capital.
"They've got over $700 million in cash so they're not going bankrupt. The stock is down 87% from its high and I think people are saying at this level maybe I give it a shot," Thomas Hayes chairman Great Hill Capital in New York said.
"It's got enough margin of safety."
As the plant-based beef pioneer expanded its product line, cash used for operations increased to $165 million in the first quarter, up from around $31 million the previous year.
"Beyond Meat's cost structure may be out of whack, and cash may run out by the end of next year," J.P. Morgan's Ken Goldman said.
"We worry that management's outlook is a bit out of balance with current realities."
Chief Executive Officer Ethan Brown attempted to address the concerns on Wednesday.
"I wouldn't take this quarter's cash consumption and then just kind of play it out and assume that we're out of cash based on that," he said, adding the company was taking "several measures" to reduce expenses.
So far this year, the stock is down around 60 per cent.
According to Ortex data, 42.1 per cent of Beyond Meat's free float was in short position as of May 9, barely off an all-time high of 42.8 per cent last week.