After the emergence of the news that the United States based alternative meat company Beyond Meat would be launching a secondary offering of 3.25 million shares just three months after it had launched its IPO in May, shares of the company which had risen by more than 750 per cent since its launch, fell sharply. Earlier in the day on Monday, the company reported mixed second quarter reports and a good forecast for the entire of 2019.
There was a 13 per cent drop in the shares of Beyond in extended trading even as the stocks closed some 788 per cent higher since its IPO launch in May this year. Here was a sharp surge in the stock after the quarterly report but dropped sharply after the announcement of the fresh stock offering.
While the company will be offering 250,000 shares for sale, about 3 million shares are being planned to be sold by the shareholders of the company. Analysts calculated that the second share sale offer could fetch Beyond and its selling shareholders about $721.9 million in funds based on the closing price of the stocks on Monday at $222.13 per share. No money from the sale of stocks that the investors are selling will go to the account of Beyond. The company would however use the funds that it would get from its stock sale would be used for product portfolio expansion and supply expansion, new marketing campaigns and for general operational purposes.
No detailed information on the share sale offering was provided by the company’s executives present on an earnings conference call. Regulatory filings by the company show that 39,130 shares is planned to be sold by the company’s CEO Ethan Brown that could generate funds worth of $8.7 million for him. About 55,530 shares are planned to be sold by CFO Mark Nelson is which would potentially fetch $12.3 million.
The company reported second quarter earnings per share loss of 24 cents while the market expected loss of 8 cents according to a survey of analysts by Refinitiv against revenues of $67.3 million compared ot market expectations of $52.7 million.
While there is good demand for its vegan meat products, the company still needs to invest much more to boost production capabilities to meet the increased demand.
The company reported a second quarter net loss of $9.4 million which was larger than the loss of $7.4 million than the company clocked in the same period a year ago.
The company however fared exceptionally well in growth of sale with a 287 per cent rise at $67.3 million. The revenue growth was driven by strong sales of the Beyond Burger, new restaurant partnerships and greater demand from existing customers, Nelson said on the conference call.
The company has forecast higher revenues in the third quarter as the company said that it expects the second and the third quarter to be its strongest. In terms of shortage in supply and Beyond not being able to meet the demand for its product, company executives said that the company is in a better position, with demand being on the rise because of the start of grilling season.
(Adapted from CNBC.com)