Like Comment Share . Is It Time to Buy? Shares have fallen 10% since news onJune 25, 2020that McDonalds was discontinuing testing of a plant-based burger it dubbed the PLT made with a Beyond Meat patty in several Canadian markets. By focusing on their fresh foods, like their Beyond Burger patties which many agreed pulled off the meatless meat trick more convincingly they were able to put their time and effort into a product that was going to make them more successful in the long run. In order to increase its manufacturing capacity, in June 2018, Beyond Meat opened a second production facility in Columbia, Missouri and a third in El Segundo, California. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. This is the first time a vegan meat alternative has been merchandised in the meat department at Whole Foods Market.After that Beyond Meatstarted calling itself:the worldsfirst plant-based burger sold in the meat case of U.S. grocery stores.. Apply. Buy These 2 Stocks in 2023 and Hold for the Next Decade, 2 Growth Stocks to Buy Before the Big Bull Rally, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. Continue reading your article witha WSJ subscription, Already a member? In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. Well, when Beyond Meat chose to switch suppliers, they allegedly shared details of Don Lees manufacturing process which Don Lee saw as a breach of contract. Even more impressive is that Beyond Meat is, well, a food company (it develops plant-based meat products) and the sales for 2018 were only $87.9 million (and yes, the company has yet to post a . First, consumers expectations for new products and innovation will rise over time. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? Beyond Meat entered into a partnership with PepsiCo. This is rather than Beyond Meat actually creating a meat brand that is real meat. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Such high spending is not only unsustainable, but it also means Beyond Meats product must be more expensive than competitors products for the firm to turn a profit. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. Instead Beyond Meat fought for placement within the meat section of grocery stores. The first campaign, The Future of Protein, was launched in 2015. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. The alternative meat producer is reportedly focusing its retail . The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. Nowadays, certain celebrities do more than advertise for the brand, some have become ambassadors for Beyond Meat, such as Byrie Irving, from the Boston Celtics. There have been many stories of grocery story employees getting told by their bosses to take the expired meat and mix it with regular meat and put it back out there on the shelf. If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. While I think a plethora of competitors have already developed a competing product, its plausible that a competitor could decide to buy Beyond Meat rather than continue building its own plant-based protein brand. Many people can not even tell the difference between real meat and Beyond Meat. Competitors. Still, it's clear that Brown's idea has caught on: The 10-year old company went public earlier this month at a $1.5 billion valuation. This created the need for healthy products. I assume revenue grows 47% in years four and five, the same as year three. Over the past twelve months, insiders have purchased 700 thousand shares and sold 4 million shares for a net effect of 3.3 million shares sold. While the market hasnt liked this news, both the CEOs of Beyond Meat and McDonalds have stated that there isno changein the relationship between the two companies. I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. But thats what BYNDs investors are betting will not happen! This report helps investors of all types see just how extreme the risk in BYND is based on: Growth Will Slow Down, but Competitors Wont. However, some investors have growing concerns about the companys ability to maintain these results. Fourth Quarter 2021. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . Moral of the story? Net revenues decreased 1.2% to $100.7 million in the fourth quarter of 2021, compared to $101.9 million in the year-ago period. This is a major strength: a high speed-to-market. The Impossible Foods start-up was founded in 2011 in California by Patrick O. This has come from the increased consumer-knowledge on healthy products, plant-based diets, and understanding what goes into the food we as consumers eat. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. After much anticipation, Beyond Meat announced a three-year partnership with McDonalds in February 2021, under which BYND will be McDonalds preferred supplier for the patty in the McPlant, a new plant-based burger being tested in select McDonalds markets globally. It has put them in a competitive sustainable advantage position because others will have to spend a lot of money on research and development to get their plant-based burger to taste like theirs. How did Beyond Meat become the leader it is today? There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. However, this trend is expected to reverse in the short term and the company will once again get on its fast growth track and there are multiple trends that support this growth outlook. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. It provided Beyond Meat with one of the best forms of advertising, credibility. The implied stock values in this scenario are significantly below Beyond Meats current price. Plant-based eaters now account for 8% of the global population. They did not service the vegan and vegetarian markets as traditional players did. There was also a long standing view which only recently has begun to change that veganism or vegetarianism will only be embraced by a narrow part of society. By July 2019, Beyond Meat could claim a market value of $11.7 billion which was a huge increase from its pre-IPO valuation of $3.8 billion. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. First of all, think of the big picture when it comes to segmentation: who will really buy your products? This created a need for plant-based foods to replace the broken system of meats. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. If you want to stay up-to-date on the latest news in the plant-based market, to learn about the most recent innovations as they come out, do not hesitate tofollow us. The following fund receives an unattractive rating and allocates significantly to BYND. As in all markets, there are leaders. on July 4th, eating a hot dog with your family. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. This allows consumers to make their own informed decision. The coronavirus pandemic put a halt to the companys fast-growing revenues as shutting down of restaurants due to the lockdown significantly affected the companys restaurant and foodservice business, which was the fastest growing segment for BYND until 2019. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. But for a young organization that wants to leapfrog rivals in gaining plant-based mindshare, the shift isn't illogical, and it may result in a durable competitive advantage. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. To show that Beyond Meats protein is just good as alternative protein on the market the brand has partnered with NBA players like Kyrie Irving and Chris Paul who are not only brand ambassadors but are also investors in the company. Even though the number of vegans and vegetarians was increasing in 2013 when the company launched its first products, the market for plant-based burgers was small: only 0.5% growth in this category. Plant-based burgers have existed for decades before Beyond Meat. I also assume Beyond Meat achieves an 8% NOPAT margin, which equals the average of Beyond Meats and Kraft Heinzs TTM NOPAT margins. Performance goals for cash bonuses could be determined by achievement of GAAP or non-GAAP financial measures and may be adjusted by the compensation committee for any reason. Probably not, considering that revenues are likely to grow almost 2.7x by 2023, with net income turning positive in 2022 and growing steadily thereafter, generating continued returns for shareholders. Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. Founder and Tech Inventor at Princess Technologies. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. However, the fundamentals reveal this stock is more style than substance. While Beyond Meat could continue to rally, it faces four challenges that. When the Chicken-Free Strips failed, it wasnt only about the taste something was just off. Whos to say that its red meat? Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. The Motley Fool has a disclosure policy. What are your predictions for the future of this company? The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. For example. Rising beef prices, coupled with the overwhelming at-home food consumption trend, present an unforeseen opportunity for the company to entice new customers by doubling down on grocery sales. The organizational goals have to be settled and explained. How? When grocery stores resisted this in the beginning Beyond Meat declined to place its product in those stores and decided to wait until a grocery store embraced its vision. Before the advent of the COVID-19 pandemic, Beyond Meat's "go-to-market" strategy -- its plan for marketing and promoting its brand, coupled with its framework for product distribution -- relied heavily on foodservice penetration. With insiders quick to sell their shares and a large and growing short interest forming, it seems that others in the market are also unwilling to bet on the future hurdles Beyond Meat must clear. Over the TTM, Beyond Meat removed $23.7 million (6% of revenue) in share-based compensation and $7.5 million in restructuring expenses (2% of revenue) when calculating adjusted EBITDA. Also, because of technology, people are becoming more and more informed about problems with big brands and the cancerous chemicals used in products for decades. The difference with other plant-based patties is that their name is a synonym of quality for their clients. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. Beyond Meat constantly reinvests their earnings in further research and development, as well as in marketing, and in scaling up production and distribution. Furthermore, many of the firms in Figure 2 have other key advantages multi-year relationships and existing distribution networks with grocery stores and quick-serve restaurants such asTyson, or in the case of Kroger, direct control of distribution and the end-consumer relationship. According to the company, this package of 10 plant-based patties reduces the price of its burgers from nearly twice that of conventional burgers to a 20% premium. Stun is a creative branding agency. Beyond Meat stated that its mission is to push boundaries and disrupt. Finally, in 2021, Beyond Meat began supplying Taco Bell with plant-based meat products and partnered with PepsiCo to develop and market plant-based drinks and snacks. In 2020, they even signed a deal to open another production facility in Shanghai! The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. And while their Chicken-Free Strips were sold at big-name stores like Whole Foods all across the US, they were later discontinued in 2019. No more comparison with animal meat products: Beyond Meat has nothing more to prove, its products are famous, recognized as good for the palate and for our health.