Beyond Meat’s (BYND) Q3: Meatless but hardly seamless
By Andrew Knoll
21:24, 11 November 2021
Vegetarian meat synthesiser Beyond Meat turned in a problem-plagued Q3 that, despite a revenue warning in late October, produced greater-than-expected losses and downward-adjusted guidance.
Beyond Meat (BYND) stock prices sank from $94.37 to a low of $77 on Thursday following Wednesday’s after-market Q3 earnings report release, though the stock rebounded slightly before close. While international sales were up by more than 140% to produce an overall increase in revenue year over year, US sales flagged, declining by nearly 14%. Retail sales, the bulk of their operation, fell substantially, and foodservice revenue was also down. Operating losses were $54m (£40.4m), nearly triple 2020’s Q3.
“Our third-quarter results reflect variability as we saw a decline from record net revenues just a quarter ago,” CEO Ethan Brown said. “Despite current disruptions, we remain focused on rapidly advancing key building blocks of long-term growth.”
Bumps in the road
Some of the company’s issues were practically boilerplate: the delta variant, supply-chain disruptions, labour shortages, etc. Others, however, were unique to Beyond Meat and set it back perhaps more than anticipated.
Water damage due to extreme weather conditions in the Northeast spurred losses, as did some decline in healthy eating kicks among consumers. While Brown suggested roadblocks were temporary, one analyst suggested the light through the fog came toward the end of Brown’s investor relations call.
“Management acknowledged at the end of the earnings call that most of its problems were driven by low demand, not by supply constraints,” wrote JP Morgan’s Ken Goldman, according to Barron’s.
After downgrading the stock in September, JP Morgan significantly reduced its target price for Beyond Meat on Thursday, as did Credit Suisse. That was in step with concerns that Beyond Meat’s figures were lagging beyond overall economic recovery and that the company may have prematurely reached market saturation in the US.
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Long-term, the vegetarian, vegan and flexitarian - those who oscillate between vegetarian and carnivorous eating habits - populations along with health, environmental and food shortage concerns all represent potential in the plant-based meat substitute sector. One study estimated that the $4.3bn (£3.2bn) market would nearly double in size between 2020 and 2025, and another suggested it could triple by 2027.
Where Beyond Meat fits into that environment long-term remains to be seen, but it has established itself as one of the more recognizable names alongside competitors like Impossible Foods.
One promising development is that the brand perhaps least associated with healthy eating, McDonald’s (MCD CFD), has begun test marketing its McPlant burger, developed in conjunction with Beyond Meat, at eight stores in the US. Earlier this year, it had rolled out the vegetarian pseudo-burger in locations across Austria, Denmark, the Netherlands, Sweden and the UK.
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