Beyond Meat (NASDAQ: BYND) is rocketing even higher.
Just yesterday, we noted that the stock surged “thanks to massive short covering following news the company completed a debt-for-equity swap that changed the share structure announced on October 13.”
Today, the alternative meat stock is up another 44% to $2.13 on a volume spike to 476 million, as compared to its daily average volume of 37.7 million. This time, it’s up on news of an expanded distribution agreement with Walmart (NYSE: WMT).
In fact, according to its latest press release, BYND “announced plans with Walmart to increase availability of select products at over 2,000 stores nationwide. Walmart, the largest U.S. retailer, is also among the first national retailers to offer the new Beyond Burger 6-Pack, featuring the latest Beyond Burger in a convenient value pack.”
Unfortunately, BYND is still disconnected from reality.
The short covering spree and the Walmart news are certainly exciting. Unfortunately, the rally won’t last. BYND is still burning cash, it’s not profitable, and consumer interest is dwindling.
We also have to consider that there’s not a lot to get excited about under Beyond Meat’s hood. In its second quarter, revenue dropped 20% year over year to $75 million, which was short of expectations. It also withdrew its full-year guidance. There’s also the $1.2 billion in debt, and about $117 million in cash on hand.
And unfortunately, the alternative meat sector isn’t so hot.
According to LATimes.com, “The entire U.S. plant-based meat and seafood industry saw a 28% drop in unit sales and an 18% drop in revenue to $1.17 billion over the last two years, according to a report by the Good Food Institute, a nonprofit that advocates for alternative proteins. The downturn also hit markets outside the United States.”
Analysts aren’t confident either.
TD Cowen just lowered its price target on BYND to 80 cents from $2, citing significant shareholder dilution with the latest swap. “According to the research firm, the transaction reduces Beyond Meat’s debt principal by 83% while simultaneously increasing the company’s share count by 413%,” according to Investing.com.
As it struggles to right the ship, it didn’t exactly help itself by diluting shareholders.
Plus, as exciting as it may seem now with the short covering and the Walmart news, once they fade, what’s there to be excited about with the stock?
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