Beyond Meat Shares Soar Following Earnings Report

Beyond Meat Shares Soar Following Earnings Report

Shares of Beyond Meat Inc. surged on Feb. 28, the day after the company released its fourth-quarter and full-year earnings

The El Segundo plant-based meat manufacturer jumped by more than 31% to close that day at $9.83. 

On Feb. 27, before it announced its fourth-quarter and full-year financials, shares closed up almost 1%. Earnings fell short of Wall Street expectations but beat on revenue. Shares closed up at $7.52 on that day.

After market close the company reported a net loss of $155 million (-$2.40 a share) for the quarter ending Dec. 31, compared with a net loss of about $67 million (-$1.05) in the same period of the previous year. 

Revenue fell by nearly 8% from the fourth quarter of the prior year to $73.7 million.

Analysts on average expected earnings of -88 cents on revenue of $66.7 million, according to Refinitiv. 

Shares closed at $10.69 on Feb. 29. 

GuruFocus, a Plano, Texas-based company that provides stock market investment information services, said the revenue decline was attributed to a decrease in net revenue per pound and weak category demand, particularly in the U.S. retail and foodservice channels. 

“International sales showed some resilience, with increases in both retail and foodservice channels,” the story said.

In November, Beyond Meat said that it was reviewing its global operations with an aim of reducing costs and boosting efficiency.

“These efforts include the potential exit of select product lines; changes to the company’s pricing architecture within certain channels; accelerated, cash-accretive inventory-reduction initiatives; further optimization of the company’s manufacturing capacity and real estate footprint; and a review and potential restructuring of the company’s operations in China,” Beyond Meat said.

The food company in November also announced it would cut about 19% of its global non-production workforce, or
65 employees. 

“In aggregate, (this year), the reduction in force, combined with the elimination of certain open positions, is expected to result in approximately $9.5 million to $10.5 million in cash operating expense savings,” the company added. 

Looking ahead, Beyond Meat expects net revenues to range from $315 million to $345 million, with gross margins anticipated to improve in the second half of the year, according to GuruFocus. 

“The company plans to continue its efforts to streamline operations and strengthen its financial position in the face of ongoing macroeconomic uncertainty,” GuruFocus said. 

That uncertainty is tied in with less consumer demand for plant-based meat products.

According to a study released last August by CoBank, a Greenwood Village, Colorado-based provider of credit to the U.S. rural economy, sales of plant-based meats are struggling as consumers turn to lower-cost and familiar proteins amid higher prices.

The plant-based meat field is crowded, and brands – such as Beyond Meat – strongly associated with the rapid rise of the food category have faced the challenge of its downturn, according to the bank’s report.

Profitability, particularly for brands solely focused on plant-based meat, remains more of a goal than a reality for many, the report added.

The debut of new products

On Feb. 21, the company announced Beyond IV, the latest iteration of two of its plant-based meat products; the new products have less sodium and saturated fat and more protein than earlier versions.

That didn’t move the stock price of the El Segundo manufacturer that much. 

Ethan Brown

After closing at $7.18 on Feb. 20, shares in the company closed the following day at $7.33, an increase of 2.1%. 

Ethan Brown, Beyond Meat founder and chief executive, said every ingredient used in Beyond IV beef and burgers was selected to bring the nutritional power of plants.

“There is goodness throughout Beyond IV, and we are excited to pass along these benefits to the consumer,” Brown said in a statement.

The new products are expected be available exclusively at retailers across the United States starting this month, Brown said in a conference call with analysts on Feb. 27.

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