BYND Stock Tumbles as Beyond Meat Faces Growing Competition

BYND stock

Beyond Meat Inc (NASDAQ:BYND) was surrounded with much fanfare when it debuted as a publicly-traded company. However, the hype seems to have faded, and the market appears to have turned against the maker of fake meat. BYND stock has tanked 40% since almost hitting $240 per share at the end of July.

Since the company went public three months ago, investors have exceptionally enjoyed an 840% gain from the IPO price of $25 per share. The fall from grace of Beyond Meat was not inevitable, it was certainly expected, and for investors, the decline is not over yet.

 Fast Growth a Result of Partnerships

There is much hype regarding plant-based meat this year, and Beyond Meat and Impossible Burger have been beneficiaries of the hype. Although plant-based meat alternatives are increasingly becoming popular in retail chains, Beyond Meat managed to grow rapidly because of partnerships with fast food joints and restaurants.

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The company’s Q1 revenue soared 215% YoY on near-500% growth in sales. The fake meat market industry has potential and could grow to $85 billion in the next decade. However, investors should be cautious regarding the company’s position in the market.

At the time of writing, BYND stock is down 2.62% at $145.61.

Growing Competition

The potential of the alternative meat market may not be as huge as currently hyped. A D.A. Davidson analyst recently reviewed the price target of BYND stock and lowered it to $130.

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There is growing competition in the niche, and Beyond Meat is dealing with more competitors besides Impossible Burger. These new rivals are well-financed and will blunt the company’s growth trajectory.

BYND stock is currently trading at 57 times forward sales. This means Beyond Meat has to grow significantly to sell close to $3.7 billion worth of plant-based burgers to be at par with average price-to-sales ratios of rivals. Currently, the company is enjoying triple-digit growth, but its top line will have to grow at a compound annual rate of around 40% in the next ten years to match that level of sales.

Featured image: DepositPhotos © bhofack2