Beyond Meat stock price has dropped to only 3 US dollars. What happened?

In an era of inflationary pressure, when you go to the supermarket and see two choices, beef and plant-based protein meat, and the price of real meat is even cheaper than plant-based meat, which meat would you choose for dinner? Beyond Meat (Beyond Meat, Inc. NASDAQ symbol: BYND) once caused a global trend of plant-based protein meat, becoming the media darling through vegetarian health appeals and earth-friendly marketing strategies, the overwhelming positive news coverage has propelled this plant-based meat company to the top.

Beyond Meat went public in 2019 with great fanfare, and its stock immediately surged by 163%, making it the top gainer of that year. However, the plant-based industry has undergone changes in recent years. Vegetarians have found that being vegetarian is not only not healthier but also a significant financial burden. Inflation has led many vegetarians to switch back to meat. In 2020, sales of meat substitutes reached as high as $1.3 billion, but after experiencing a three-year decline, they dropped to $1.1 billion in 2023. Source: Circana Beyond Meat's sales have been declining year after year, leading to continuous layoffs and factory closures. Its stock price plummeted by 62% last year. In 2019, Beyond Meat's stock price was $234, but it has now tumbled to $3.29. What happened that made plant-based meat lose its appeal?

Tech industry celebrities have helped create waves, and the trend of vegetarian health concepts once swept the globe.

Many tech industry celebrities are advocates of vegetarianism, including Bill gates, founder of Microsoft, Sam Bankman-Fried, founder of FTX, Mark Zuckerberg, founder of Meta, and the eccentric billionaire Bryan Johnson, who strictly controls his diet, only eats vegetarian food but swallows dozens of vitamins and pills every day, and extracts blood from his own children to stay forever young. Mark Zuckerberg later did not persist in vegetarianism and returned to eating meat from animals he slaughtered himself. SBF, even while serving his sentence in prison, still adheres to his altruistic philosophy of compassion and continues to be vegetarian, although he often complains about the lack of vegetarian meal options in prison. With the support of a large number of high-profile celebrities, the alternative meat market reached a peak of $13 billion in overall market value during the spread of the epidemic in 2020.

Beyond Meat's flagship vegan burger, it is difficult to escape the demand for traditional food texture

Beyond Meat focuses on American meat products such as hamburgers and steaks that Americans love. Even though it promotes plant-based protein vegetarian products, it still needs to emphasize the same texture as real meat. Beyond Meat has established partnerships with many fast food chains, yet these vegetarian burgers have never become a staple menu item. Facing changes in consumer eating habits and inflationary pressures in the retail market, Beyond Meat's sales performance has weakened due to increased costs, making it difficult to sustain growth.

High cash burn at Beyond Meat poses high risk

Beyond Meat's Q4 financial report shows that sales have achieved positive growth for the first time in nearly three years, with an increase of 7.6%. However, according to InvestingPro's data analysis, the fundamentals are still concerning, including a gross profit margin as low as 12.77% over the past 12 months, EBITDA at negative 125.5 billion US dollars. The slight growth in sales is mainly attributed to the inflation-driven price increase of products in the U.S. retail market, which boosted the apparent profit figures, seemingly offsetting the decline in sales volume.

Beyond Meat faces the issue of a high cash burn rate. According to the Q4 financial report, Beyond Meat spent 23 million US dollars, with an end-of-period available cash of 121.7 million US dollars. Investing analysts believe that the cash burn is too high, with a negative free cash flow of 109.8 million US dollars in the past twelve months. Such a high cash burn rate has raised concerns about whether Beyond Meat has enough funds to support its operations.

Regardless of whether it is for religious reasons or personal choice needs, the debate of whether a vegan diet is healthier and more environmentally friendly often triggers opposing views. However, the story of Beyond Meat plummeting to three dollars can verify that when inflationary pressures soar, people's eating habits will change accordingly. After all, money is not everything, but without money, eating is absolutely impossible.

Has this article lost its appeal? Beyond Meat's stock price is only $3, what happened? First appeared on Chain News ABMedia.