Shares of Beyond Meat (NASDAQ:BYND) are up nearly 7% in mid-day trading. This continues a trend that has been ongoing in 2020. BYND stock has more than doubled since the beginning of the year despite seeing its share price decline by over 50% at the onset of the Covid-19 pandemic.
Why is BYND Stock on the Move?
The plant-based meat company has had several catalysts in the last week that are peaking interest from investors.
- The company is introducing its Cookout Classic Value Pack. Customers can get a 10-pack of Beyond Meat patties for $15.99, basically $1.60 per patty. That’s 36% less than a normal two-pack that costs $5.99. The new packs will be available at Walmart (NYSE:WMT) and Target (NYSE:TGT). The promotion is scheduled to run through mid-August or while supplies last.
This will address the price difference that has been an obstacle for the company in attracting consumers to give its product a try. It also doesn’t hurt that the price of meat is significantly higher as the novel coronavirus wreaks havoc with supply chains.
- The stock is also benefiting from the recent upgrade the stock received from Credit Suisse analyst Robert Moskov. Moskov is now giving the stock a price target of $154 a share, which is 71% higher. And although it puts the stock below its current trading level, it reflects the generally bullish outlook that analysts have given the stock in the last six weeks.
- And Moskov’s analysis brings up a third reason why Beyond Meat stock is climbing, a trend toward vegan foods is moving away from restaurants and to the home cook. According to Health Careers, 6% of Americans claim that they do not consume meat. And while that number may not seem impressive, it’s up over 600% since 2014.
Says Moskov, ““Consumer survey data from Hunter indicates that the number of people who say they are eating healthier foods has increased 20% since the start of the pandemic.”
- The company is getting set to launch a direct-to-consumer website in late summer. In theory, this will help the company get an inroad with loyal customers who may be tempted to buy lower-priced options as competitors enter the space.
What’s Next For BYND Stock?
The long-term outlook for BYND stock rests on the company’s ability to get higher margins at a time when more competitors are entering the space. The company is also seeing higher profits but also continues to burn through cash at an alarming rate. Free cash flow (FCF) decreased to -$107 million in 2019 after being -$72 million in 2018.
That’s not math that I like particularly considering the fact that Beyond Meat is having to entice first-time users with discounted pricing. This is exactly the opposite of helping the company achieve the higher margins it needs.
As a result, BYND stock is expensive by almost every measure. Yet investors don’t seem to care. And so you have to be careful to not fight the trend. The trend for Beyond Meat will remain bullish for two reasons.
First the cost of real meat is likely to remain elevated due to supply chain constraints. Those constraints aren’t going to go away until the novel coronavirus is a distant memory. Second, BYND stock remains one of the top 100 most popular stocks on the Robinhood app. This may not be a perfect metric, but investors will avoid this at their peril.
Millenials, the demographic that makes up a large percentage of Robinhood traders, tend to be more attracted to companies that align with their social causes. And Beyond Meat certainly fits that description.
Whether or not Beyond Meat has a long shelf life remains to be seen, but right now there’s no reason to not take a bite.
Companies Mentioned in This Article
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