Beyond Meat (NASDAQ: BYND) stock price has been in a strong bull run as it surged by 40% between April 25th and May 6th. It then suffered a harsh reversal on Wednesday after the company published weak financial results. It tumbled to a low of $7.12, down by 13.4% from its highest point this month.
The plant-based meat industry is strugglingBeyond Meat is one of the top disruptors in the food industry. It is the biggest player in the plant-based industry, which some analysts believe to be the future of food.
A study by Grand View Research showed that the industry’s market size was valued at $4.4 billion and that it would have a CAGR of over 24% by 2030. This trend will be driven the young people who are more concerned about animal cruelty and climate change.
However, the reality is that the industry is not doing well since most people still prefer animal meat. Data by the USDA has constantly shown that meat consumption in the US has been growing albeit at a slower pace.
At the same time, the earnings of key companies show that their momentum is waning. Beyond Meat’s revenue came in at $343 million in 2023, down from $418 million a year earlier. Its annual loss jumped to $338 million in 2023 from $366 million a year earlier.
It is not alone. Oatly, an Oprah Winfrey-backed company that makes plant-based milk, had a net loss of over $417 million in 2023, an increase from $392 million a year earlier. Its annual revenue growth rate slowed to 8.4%, down from 106.5% in 2020.
It is against this backdrop that Beyond Meat published weak financial results on Wednesday. Its revenue dropped from $92.2 million in Q1’23 to over $75 million in Q1’24. Its net loss also came in at $54 million, higher than what analysts were expecting.
The company attributed this performance to a decline in volume and higher discounting that affected its pricing. Also, Beyond Meat noted that its international business was struggling as sales plunged by over 12%. In a statement, the firm accepted that the sector was slowing and noted that its sales would be affected by the:
“Ongoing, further weakened demand in the plant-based meat category, inflation and high interest rates and concerns about the likelihood of a recession, among other things
The challenge for Beyond Meat is that it is in an industry that is struggling, which explains the need for increased discounting. Also, there is a high possibility that it will need to raise cash as its reserves dwindle.
It ended the quarter with $157 million in cash and equivalents, down from $190 million in December last year. If the loss-making continues, as most analysts expect, the company will need to raise cash either later this year or early next year.
Beyond Meat stock price analysis
BYND stock price staged a strong comeback as investors bought the dip. This rebound happened after it formed a double-bottom pattern at $5.97. In most cases, this is one of the most bullish patterns in the market. It even formed a small bullish flag pattern, which is a popular continuation sign.
These earnings mean that the company is in more trouble than what most analysts and investors were expecting. As such, there is a possibility that the stock will continue falling as sellers target the key support at $5.97, which is about 16.2% below Thursday’s open.
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