The shares of the alternative meat startup Beyond Meat Inc slumped by 10 per cent after the company reported that higher costs had caused its quarterly earnings to miss estimates. The company also announced that its Executive Chairman Seth Goldman would give up his executive status but will continue to remain a member of the board of the company.
The company’s losses were substantially and sales were boosted substantially because of deals with retailers and restaurants, said the plant-based meat company. However during the quarter the company also reported to have lost 1 per cent share compared to expectations of analysts of gaining 1 per cent as calculated by Refinitiv IBES data. Expenses for R&D, marketing and its fast-paced international expansion have meant that Beyond Meat has never been able to report a yearly profit. The company also reported higher costs in the most recent quarter for restructuring and some administrative measures.
Last year, there were a number of high-profile deals that were struck with fast-food chains by the El Segundo, California-based company – which is often credited for the start of a global craze for plant-based meat products. Those deals include one with McDonald’s Corp and another with Dunkin’ Brands Group Inc. Analysts expect that the global market for plant based meat will soon reach $140 billion in value because of growing health consciousness among consumers as well as concerns for global warming because of green house gas emissions from industrial animal farming.
Since the company had launched its initial public offering (IPO) in May last year, there has been a four-fold growth in its stock price. However some investors and many short sellers believe that the stock is overpriced.
“There were very high expectations for BYND going into this earnings release,” CFRA Research analyst Arun Sundaram said. “However, we wouldn’t be surprised if the stock bounced back a bit tomorrow once the market opens.”
“Seth Goldman’s step down as executive chair is a bit shocking to us. You don’t typically see one of the early pioneers of the company shedding responsibilities during the very critical growth stage of company,” Sundaram said. Goldman joined Beyond Meat as executive chair and as a member of the company’s board in February 2013.
Large American retailers including Walmart Inc and Amazon.com Inc’s Whole Foods sells Beyond Meat’s products. Starbucks recently announced that the fast food and coffee chain will soon be selling a Beyond Meat breakfast sandwich across Canada.
But even though Beyond Meat,and its main rival Impossible Foods, continue to revel in striking deals for their products, some signs of issues have cropped up for the company which include Beyond Meat’s products being dropped from its menu by Canadian restaurant chain Tim Hortons. The restaurant chain had said that its customers were found not to “embrace” the products during a trial run. And Burger King started to cut down the price of Impossible Burgers last month and has started to put them to the value menu of the chain since last month.
(Adapted from TheStreet.com)