Beyond Meat Can't Catch A Bid

Food tech was on a run when quantitative easing was generous, and many thought those times would never end.

QE even had the added bonus of propping up zombie companies that were hopeless at turning a profit and in tech, there are many that fit that bill.

With a crashing thud, food tech is going through a cringe-worthy reckoning as a drip of data points suggest that food tech’s growth phase could be in the rear-view mirror.

It’s pretty much inexcusable that something like this happens so early in the growth cycle.

This must be a kick in the teeth for the company Beyond Meat (BYND) which produces the plant-based burger called Beyond Burger.

Total revenue in 2021 of $465 million and a loss of $182 million is hard to swallow.

Exposed at the worst possible time while capital markets close off the spigots means that management will need to turn around this company without the tailwind of low rates.

This could go from bad to worse for BYND and that is why the stock has felt the full force of the pessimism with the stock pulling back from $200 in 2019 to $43 today.

There simply is a reduced appetite for growth tech and food growth tech is on the outer edge of what would be considered reasonable in terms of the risk paradigm.

Investors have deserted this stock in unison, and I expect a cold winter for BYND’s stock as investment research firm Piper Sandler just released its latest teen survey, and it contained a barrage of highly negative news for BYND.

Not only are teens losing interest in plant-based meat alternatives, they also don’t have much of a preference for branded plant-based meat.

Piper analyzed the results of the firm’s survey work with more than 7,000 teens and found that 43% either eat plant-based meat or are willing to, down from 47% last fall and 49% in the spring of 2021.

Of the teens who don’t eat faux meats, 34% said they were willing to try it, down from 38% in the fall, when Piper Sandler last polled consumers.

This huge reversal means that people actually do like eating real animal-based meat instead of the fake stuff ,or the technology morphing plants into fake meat is not good enough.

I believe it’s a mixture of the two.

People want that cow-based steak or burger and there simply isn’t a substitute for it.

The incremental case for eating a Beyond burger is now null and void, consumers might as well microwave some frozen chicken nuggets.

There is no advantage for the Beyond burger and it appears as if BYNDs management got a little too arrogant with their product that isn’t up to snuff.

Limitations are hard to stomach but I should say the truth: plant-based burgers just aren’t that good, period.

Beyond Meat is still the No. 2 preferred brand, just behind privately held Impossible Foods, and ahead of Kellogg’s (K) Morningstar Farms.

While Beyond Meat’s scale is a positive, given it has the resources to develop new products and partner with high-profile partners, a lack of loyalty means it may not be enjoying much of a first-mover advantage. 

Often, it can be hard to turn around such negative sentiment.

I would advise investors to not believe in this reversal at this point in the economic cycle.

The Fed is more hawkish by the day and that doesn’t scream to me that investing my money into food tech is a great idea.

The cold winter for food tech is here and better to wait it out and watch from the sidelines.