Daily Management Review

Beyond Meat Surges As Cost-Cutting Measures And Pricing Increases Compress Heavily Shorted Shares


Beyond Meat Surges As Cost-Cutting Measures And Pricing Increases Compress Heavily Shorted Shares
In premarket trading on Wednesday, shares of Beyond Meat shot up 56% as the company, which makes plant-based meat, gambled on price increases and drastic cost reductions to boost its battered margins and put pressure on its heavily shorted shares.
The data and analytics company Ortex estimates that as of Monday, about 37.6% of the business's free float, or shares valued at $172.6 million, were shorted.
Co-founder of Ortex Peter Hillerberg stated, "We expect short sellers to add to the buy pressure, and therefore causing a short squeeze," noting that bearish investors have lost $93 million on paper since Tuesday's closing.

The market value of Beyond Meat has dropped by 60% in the last 12 months as consumers' perceptions of plant-based meat have deteriorated as a result of rising costs and persistent inflation.
Although the company's fourth-quarter net revenue of $73.7 million was 7.8% lower than analysts' projected $66.7 million, it was still a positive result.
In order to make fake meat more enticing to American consumers on a tight budget, Beyond Meat also revealed plans to "steeply reduce" expenses.
In contrast to 2023's negative 24.1% gross margin, it predicted 2024's gross margins to be in the mid- to high-teens percentage range.
"Beyond Meat had its proverbial 'kitchen sink' quarter last night as it embarks on a major restructuring and turnaround effort... believe management is in the early innings of right-sizing this company for a more sustainable path forward, and question if its guidance is achievable," Peter Saleh, a BTIG analyst.
At its most recent price of $11.70, the stock is expected to reach a six-month high if the gains continue. However, that was far less than its July of last year's $19.25 12-month peak.
A phenomenon known as a "short squeeze" occurs when short sellers hurry to remove their pessimistic bets in response to a spike in a stock's price, which drives shares even higher.