The nosedive in the stock market should make it easier for short sellers to make money. They certainly have gambled that the shares of several companies will collapse. The most shorted stock list is littered with public corporations in great trouble. The one with the largest short interest compared to its float is Beyond Meat, the shares of which have been driven down by a consumer moving away from meatless meat.
The short interest in Beyond Meat Inc. (NASDAQ: BYND) is 41%. The stock is down 77% this year. The company has fired 20% of its employees, hoping the move will improve its bottom line. Management said it plans to be cash flow positive by the latter half of 2023. That is a long way off, particularly for a company struggling to keep customers.
In the most recent quarter, Beyond Meat’s revenue flattened to $147 million, compared to the same quarter a year ago. It lost $97 million, which was 66% of its revenue.
Management signaled its problems would not improve soon. Supply chain issues, inflation and a softening economy are the primary reasons. Plant-based meat is usually more expensive than real meat. Inflation-plagued consumers take that into account as their pocketbooks tighten.
A recent CNN Business story, Is Beyond Meat Beyond Saving?, quotes Beyond Meat CEO Ethan Brown: “We went from a pandemic into record inflation. And for a sector that’s still gathering its feet and is still in sort of the first set of downs, that’s a very difficult set of conditions to navigate.” It is the kind of statement that feeds short sellers.
Usually, the major reason short sellers flee a stock is a significant rally. That is not in Beyond Meat’s future.
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