Beyond Meat’s sales are soaring, but its investors are nervous

After a successful IPO in May, the company’s stock fell more than 10 percent after announcing a second stock offering.

Beyond Meat CEP @ Nasdaq Marketsite
Sales of Beyond Meat's burger patties and sausages are gaining in popularity and Ethan Brown, the company's founder and chief executive, says the company plans to keep investing in marketing and new products despite investor concerns over a proposed new stock offering [Michael Nagle/Bloomberg]

Beyond Meat Inc saw shares sink on Monday on plans for another stock offering just three months after its IPO while demand for its plant-based burgers and sausages soared in the second quarter and prompted an increase in its full-year sales forecast.

Trading was volatile and shares fell more than 12 percent after hours on news of a 3.25 million share offering that includes three million shares from selling stockholders.

Proceeds are earmarked to raise funds to expand its manufacturing facilities that are being stretched by booming demand for its meat alternatives. Executives on a call with analysts declined to comment on the offering.

Beyond Meat’s shares have surged over 780 percent since the IPO in May as the company’s meat alternatives entered the menus of restaurants such as Carl’s Jr and on shelves of grocers including Kroger Co.

“For another growth stock, the top-line beat and raises would be enough to see a post-market rally, but there are a lot of Beyond Meat investors out there looking for any excuse to sell a stock that has rocketed so much since its IPO,” said Kamal Khan, an analyst at financial-markets platform

At supermarket chain Morton Williams, which owns 16 locations across New York City, some customers are buying Beyond Meat burger patties and sausages by the case, according to Victor Colello, the chain’s director of meat and fish.

“Beyond Meat is really flying off the shelves. My business with it has almost doubled and we’re sold out at times,” Colello said. The latest version of the burgers is made from peas, brown rice and mung beans.

Net revenue rose nearly four-fold to $67.3m in the three months ended June 29, above Wall Street‘s estimate of $52.71m, according to Refinitiv IBES data.

The company said it expects net revenue to rise over 170 percent to $240m in 2019, up from the prior $210m it had forecast just last month.

The El Segundo, California-based company reported a net loss of $9.4m, or a loss 24 cents a share, compared with a loss of $7.4m, or a loss of $1.22 a share in the last year.

Looking ahead, Chief Executive Officer Ethan Brown said in a statement that the company would continue to invest in marketing, expansion of distribution channels and new products.

Even so, the company has sceptics. Some 46 percent of the company’s publicly traded shares are shorted, according to research group S3. Those investors, owning shares worth $1.1bn, are betting on the company to miss its targets and the share price to drop.

Source: Reuters