Daily Management Review

Some Analysts See Hype For Beyond Meat Similar To That For Bitcoin


Some Analysts See Hype For Beyond Meat Similar To That For Bitcoin
The sensational rise in its share prices since the launch of its IPO in the United States ealrier this year is pushing many analysts to compare the alternative meat company Beyond Meat to bitcoin.
Beyond Meat’s IPO pricing in May this year was $25 per share and has so far increased by 794 per cent and as of last week was at a record high of $239.71. The astronomical surge in the price has forced many Wall Street analysts not to recommend buying the stock.
On the other hand, since May 2, there has been a 79 per cent rise in the value of bitcoin. This digital currency is also known for its volatility and rollercoaster ride in its value. It reached its highest ever value for 1 bitcoin at $20,000 in December 2017 because of increasing attention and coverage from mainstream media and retail investors. However its value has reduced by as much as 50 per cent since then. The high volatility of bitcoin has scorched the hands of some investors.
There are bets on a bitcoin like fall for Beyond’s stock being made by short sellers.  Short sellers borrow a stock with the expectation that its price will fall and the investor can repurchase it at a profit. According to data from S3 Partners, almost 44 per cent of Beyond’s outstanding shares are being shorted.
“It’s captured the imagination of every amateur shortseller out there,” Andrew Left of Citron Research said.
His firm covered the float on its short bet on Beyond, said Left, one of Wall Street’s most prominent short sellers. Covering the float involves purchasing the same amount of shares that an investor has shorted in order to offset losses if the share price jumps even more.
According to S3 Partners, $66.5 million in losses for short sellers took place because of Friday’s rally in the stock. The short sellers are have lost about $427.8 million so far in July on the stock.
“This has nothing to do with the company, but it’s not taking away from the company,” Left said. “They’re not doing anything wrong.”
Currently, Beyond Meats is the only publicly traded company that makes meat alternatives from plant products that taste and feel like meat. The main rival of the company in the United States, Impossible Foods that partner with the likes of Little Caesars and Burger King, is still privately held. There are however established traditional food companies like Nestle and Tyson Foods that are entering the plant-based meats business and would be a source of competition for Beyond.
According to estimates of analysts surveyed by Refinitiv, a second-quarter loss of 8 cents per share against revenue of $52.7 million is being expected to be announced by Beyond.
The anticipated loss for Beyond in the second quarter, its first since getting publicly listed, is one of the reasons that many analysts claim that the market valuation of the company is not justified. Despite the growing demand from customers for plant based meat, beyond is still making losses because it is struggling to meet the demand growth.