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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Prospects for Beyond Meat

10/08/2019

Chris Markoch, an analyst recently reviewed prospects for Beyond Meat (BYND). After a meteoric rise during the quarter following the IPO, the market capitalization of the company has since declined from $12 billion in July to $8.5 billion at present.

Markoch predicts a decline in margin based on competition from Impossible Foods, partnered with Burger King, the Costco Private Label Better Than Beef Burger, Nestle Sweet Earth and products from other manufacturers including Tyson Foods, Maple Leaf and others. It is evident that the barrier to entry for vegetable-based meat substitutes is low and given available technology and availability of ingredients, Beyond Meat will enter a period of extreme price competition.

At the present time, it is impossible to predict market size and value given that the initial growth is off a small base and incorporates a curiosity factor. Even accepting projections for vegetable-based meat substitute market of $80 billion annually in 10 years, and if BYND has a 10 percent share of that market, annual sales would be $8 billion. The 10-year projection is unrealistically long given the absence of any track record for the category.

Investors including private equity groups feel obliged to have a presence in the space based on the prospect of high returns over the short term. It will be at least five years before the relative volumes of vegetable-derived meat substitutes is quantified forming a base for realistic projections.

Beyond Meat (BYND) was priced at $45 at the time of the IPO and soared to $239.71 but   declined to $142.51 at 10H00 on October 8th. For the 6-months ending June 29th the company lost $16.1 million on revenue of $107.5 million. BTND posted a 12-month trailing operating margin of (9.8) and a profit margin of (19.9). With a forward P/E of an eye-watering 527 the stock is highly over-valued


 
Copyright 2019 Simon M. Shane