Beyond Meat Inc. saw a drop in its share price after releasing fourth quarter financials late last month.

Following the El Segundo alternative meat provider reporting its financials after the market closed on Feb. 26, when its share price closed at $3.56, they then closed at $3.18 the following day for a decrease of nearly 11%.

Shares closed at $3.15 on March 6.

Beyond Meat reported on Feb. 26 an adjusted net loss of $44.9 million (-65 cents a share) for the quarter ending Dec. 31, compared with an adjusted net loss of $155 million ($2.40 a share) in the same period the previous year. Revenue increased by 4% from the fourth quarter of the prior year to $76.7 million.

The company attributed the revenue increase to a 6.3% jump in net revenue per pound, partially offset by a 2.1% decrease in volume of products sold.

“The decrease in volume of products sold was primarily driven by weak category demand and price elasticity effects in the U.S. retail channel, and by lower sales of ground beef and chicken products in the international retail channel,” the company said.

Achieving profitability in the future

Ethan Brown, founder and chief executive of Beyond Meat, said in a statement that the company was pursuing four main goals to achieve positive earnings before interest, taxes, depreciation and amortization by the end of next year.

First, it is focusing on sustainable operations, a move the company said will produce positive revenue changes.

The company is also looking to improve its gross margin to approximately 20% with a longer-term goal of exceeding a gross margin of 30%.

It is also looking to reduce operating expenses over the next two years and intends to strengthen its balance sheet to improve liquidity and optimize the capital structure.

“We are pursuing these four measures with considerable confidence in the long-term growth of the global plant-based meat industry and our leadership position therein,” Brown said in the statement.

Reducing operating expenses is key

In an effort to reduce operating expenses the company announced on Feb. 26 that it was laying off about 44 employees in North America and Europe, representing approximately 6% of the company’s total global workforce, and that it would also cease all of its operations in China by the end of the second quarter and let go 20 employees in that country.

The layoffs would create a savings of $5.5 million to $6.5 million for the year while the closure of the Chinese operations would result in a $500,000 to $1 million savings.

“In addition, the company currently estimates that it will incur one-time non-cash charges of approximately $12 million to $17 million, primarily related to accelerated depreciation and impairment charges and other write-downs on certain fixed assets in China,” Beyond Meat said in its fourth quarter financials release.

Beyond Meat invested more than $40 million into its Chinese subsidiary, Beyond Meat (Jiaxing) Food Co. Ltd., for leasing and improvements to a manufacturing facility in Jiaxing and to lease a building in Shanghai as a research and development facility in 2021.

Andrew Strelzik, an analyst with BMO Capital Markets Corp., said in a research note from Feb. 27 that he remains concerned about future sales trajectories at Beyond Meat “owing to category headwinds and efforts to bolster balance sheet could weigh on shares in the near term.” Due to his “tempered outlook” Strelzik said he was lowering his target price on Beyond Meat to $5 from $6.

“Uninspiring sales trajectory is expected to persist (this year), with guidance implying flattish sales (year over year) despite expansion of retail business in Germany beginning in 2Q, continued (albeit more selective) pricing domestically, and some product line innovation,” Strelzik wrote in the report. “Beyond noted that it expects share gains in 2025 as it does not assume category improvement from recent levels and sees signs of shakeout among smaller brands.”