Plant-based meat producer Beyond Meat (NASDAQ: BYND)
has seen major volatility in its shares evidenced by its 52-week range of $45.00 to $239.71 since its IPO in May 2019. As the publicly traded face of the plant-based meat movement, BYND has transformed from a traditional food producer to a high-flying momentum stock. Pundits have argued that valuations have gotten absurd despite 240-percent YoY revenue growth and rapid penetration of its faux meat products into 58,000 outlets in 53 countries including well-known brands like Dunkin (NASDAQ: DNKN), Subway, TGI Fridays, A&W Restaurants, Hardee’s and Carl’s Jr. BYND recently announced expansion into France with a supermarket deal with Casino Group, Rosaparks, and Steak & Shake stores. The company faces heavy competition from privately-owned Impossible Foods, whose Impossible Whoppers have become a mainstay on Burger King menus. BYND has been in a long testing phase with McDonalds (NYSE: MCD) as anxious investors anticipate a long-awaited rollout in 2020.
BYND reports Q4 2019 earnings post-market on Thurs. Feb. 27, 2020, followed by the 4:30 pm EST conference call. Consensus analyst estimates are for breakeven EPS on revenues of $81.52 million. During the Q3 2019 earnings conference call, Beyond Meat CFO, Mark Nelson pointed out the 25-percent drop in cost of goods sold (COGS) going from $4.89-per pound to $3.69-per pound enabling price drops which still maintaining mid-to-high 30s gross profit target. Analysts at Bernstein estimate $227 to $306 million incremental sales from a potential domestic rollout with MCD citing 45-55 patties per-store versus 28 Impossible Whoppers sold daily at Burger King outlets as they lowered price targets for $106-per share from $117. While BYND shares have managed to recover back above $100 since it’s Q3 2019 earnings sell-off, management will have to refine the narrative to bolster sentiment especially in light of increased competition from Tyson Foods (NYSE: TSN) and recently privately held agricultural giant Cargill. Investors will want visibility on any impact of the coronavirus epidemic on global supply chains and customer demand.
Rifle Chart Technical Analysis Trajectories: Longer-Term
We use the rifle charts on wider time frames to lay out the playing field suitable for swing traders and investors. Since BYND is less than a year old as a publicly-traded company, the monthly rifle chart still needs more time to develop the stochastic reading. The weekly stochastic oscillation up has stalled under the 80-band, which means either a mini pup breakout towards the upper Bollinger Bands (BBs) at 139.76 with 5-pd MA support at 114.85 or a stochastic cross down triggering a channel tightening to the 15-pd MA at 95.89 is in the cards. The daily riddle chart shows a tightening range underscored by the contracting BBs (upper BBs sloping down and lower BBs sloping up). This implies a range break is setting up and subsequent BB expansion. The only question is the direction. With the daily stochastic also stalled under the 80 band, a dual mini pup breakout is possible or collapse through the daily lower BBs at the 103 Fibonacci (fib) level.
BYND is the only publicly traded “pure-play” for plant-based meat products and holds unique qualification as a momentum stock. There aren’t usually direct sympathy plays with consistently positive correlation. However, if BYND makes headlines with an exceptional price gap exceeding 10-percent, then it’s worth monitoring other competitors in the meat, poultry and processed foods industry including Tyson Foods (NYSE: TSN) , Pilgrim’s Pride (NYSE: PPC) , ConAgra Brands (NYSE: CAG) and Hormel (NYSE: HRL).
Trading Game Plan for Earnings Gap:
This information is accommodative to intraday and short-term traders looking to play the earnings gap. With a post-market earnings release followed by an immediate conference call at 4:30 pm EST. Only the nimblest traders should even consider hitting the immediate reaction on the post-market release. The 4:30 pm EST conference calls are a growing trend with companies lately. Nimble post-market traders can scalp the price gap reversion levels, but most should wait for the morning session off the opening bell. Traders can expect scalps ranging from 0.50 to 3.00 in the first 20-minutes as ranges and spreads eventually contract. BYND still has a relatively thin float of just 37.5 million shares with a 16-percent short interest.
Reversion scalps off the key price inflections levels can be played for the second gap reaction then shift focus to the third reaction trend move. The gap price reversion levels for the upside price gaps are: 128.79 fib, 134.81 fib, 145.85 fib and 153.60 fib. Downside gap reversion price levels are: 103.03 fib, 95.85 monthly 15-pd MA, 85.70 fib and 80.18 fib. BYND gap price levels requires wide wiggle room initially upon initial release and opening bell. Depending on your trading platform, shares may be hard to locate for short sales. In-the-money weekly put options can be substituted for short sales for seasoned traders only.
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