A Deeper Dive into Beyond Meat: Disrupting the $1 Trillion Meat Industry

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Beyond Meat (NASDAQ: $BYND) has witnessed growth since its IPO launched and continues to disrupt the multi-trillion dollar meat industry by offering vegan substitutes for meat products. 

Consumers are continuously seeking healthier and safer alternatives to animal-based meat. Beyond Meat allows them to experience the same taste, texture, and other attributes of meat products while having more nutrients. 

According to a study by the food and beverage communications firm Hunter, the pandemic has attributed to a 20 percent increase in American’s fleeting for healthier food options.

Beyond Meat’s stock suffered several times in the past, but IBR predicts that it will continue to surpass the $200 mark because of the excellent market opportunities and current position. 

It has also turned into a “cult-stock” – decoupling it from some of the traditional fundamentals. Similar to Tesla.

 

Beyond Meat’s Strong Financing Capabilities

Since the company’s inception, the company operated at a loss, diverting cash towards research and development initiatives. However, rapid sales growth is offsetting these costs and mitigating the amount of debt they currently have.

During the most recent quarter, net revenues equaled $97.1 million, a 141% increase from last year. The company also emerged out of the loss of $6.6 million and generated net income of $1.8 million. 

The company secured a $150 million five-year revolving credit facility, which replaced its previous credit arrangements, increasing its borrowing capacity, lowering the cost of capital, and creating greater strategic flexibility for future initiatives. 

“I am proud of our first-quarter financial results, which exceeded our expectations despite an increasingly challenging operating environment due to the COVID-19 health crisis,” said Ethan Brown Beyond Meat’s President and Chief Executive Officer. 

 

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Beyond Meat’s strategic decisions have propelled the company to become the first supplier of plant-based food IPO to launch and the most experienced in developing plant-based protein sources. 

The plant-based meat producers use the majority of their capital to produce specific types of food, which has dramatically lowered their costs of production while meeting the growing demand for their products. 

Beyond Meat has launched partnerships across the globe, helping to boost international sales. The company announced two facilities in the Netherlands to create meat alternatives and signed a distribution deal with a partner in China to distribute it across the nation. 

 

The Bottom Line

Critics may argue that there are ample competition plant-based meat segment and uncertainty about the future of the plant-based protein market.

However, Beyond Meat has already established itself as an emerging and experienced leader. Its substantial contributions to research and development have rewarded the company today. 

Customers have, nevertheless, raised concerns over the prices of the company’s vegan products and question whether it would be a cheaper alternative for regular meat items.

Another concern is regarding the taste and consistency – trying to mimic meat has psychological barriers that may be easier surpassed by introducing a clearly distinct alternative.

The Covid-19 pandemic has created a strategic opportunity for the company to lower its prices within 20 percent of meat-based options.

The opening of the new facilities in Europe and China will allow Beyond Meat to continue cutting the prices of its plant-based products. 

Veganism is a way of life that is growing amongst people across the globe, and Beyond Meat is a firm that has capitalized upon this. 

With the current trend IBR feels comfortable that the company’s stock price easily could exceed the $200 mark as the market pushes the cult-stock higher. 

 

Nitya Bhatt

Equity Research Analyst

Nitya is currently studying business administration at the Schulich School of Business in Canada. During his undergraduate studies he worked in several business development, sales, and leadership roles. Nitya began investing in stocks at an early age which further grew his interest in finance and trading. He has written numerous articles related to economics and politics. However, when he is not busy writing or researching, he enjoys playing badminton competitively, reading science fiction, and hiking in the wilderness.

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