What Happened?
Shares of plant-based protein company Beyond Meat (NASDAQ:BYND) fell 17.8% in the afternoon session after the company released preliminary third-quarter results that pointed to continued soft demand and warned of a significant future asset writedown.
Beyond Meat announced it expected net revenue of approximately $70 million, which was down from $81 million in the same period of the previous year. The company also projected a gross margin between 10% and 11%, which included costs tied to the shutdown of its operations in China. Adding to investor concerns, the company disclosed it would record a "material" non-cash impairment charge. This charge suggested that the value of some of its long-term assets, like factories and equipment, was less than previously recorded on its books. Compounding the negative news, a Mizuho analyst lowered the firm's price target on the stock to $1.50 from $2.00, citing "weak" fundamentals.
After the initial drop the shares shed some of the losses and close the day $2.19, down 22.8% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Beyond Meat? Access our full analysis report here.
What Is The Market Telling Us
Beyond Meat’s shares are extremely volatile and have had 60 moves greater than 5% over the last year. But moves this big are rare even for Beyond Meat and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 14.5% as the unsustainable 'meme stock' rally appeared to collapse, with the stock reversing sharply after a massive surge in the previous week. The stock had soared by as much as 388% in a speculative frenzy fueled by a 'short squeeze,' a market event where investors who bet against a stock are forced to buy shares to cover their positions, pushing the price up. However, the rally was disconnected from the company’s underlying financial health, which included weak revenues, ongoing losses, and a history of no annual profits. Earlier in the month, Beyond Meat executed a debt-for-equity swap that added up to 326 million new shares, significantly diluting existing shareholder value and causing the stock to crash at the time. The session's decline suggested the speculative excitement had faded, returning focus to the company's fundamental challenges.
Beyond Meat is down 45.2% since the beginning of the year, and at $2.11 per share, it is trading 67.9% below its 52-week high of $6.58 from November 2024. Investors who bought $1,000 worth of Beyond Meat’s shares 5 years ago would now be looking at an investment worth $12.82.
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