Why Beyond Meat could still be a monster investment despite earnings selloff
finance.yahoo.com
Wall Street was beyond unhappy with the surging Beyond Meat (BYND) on its earnings day Monday evening — but perhaps they should re-read the earnings call transcript.
Beyond Meat’s stock — up about 800% from its wildly successful May IPO — cratered 12% in early trading Tuesday as investors fretted about a surprise new share offering. The alternative meat-maker announced that it would be selling an additional 3.25 million shares of common stock just moments after its earnings hit the newswires.
Three million of these shares are held by current stockholders, and 250,000 shares will be newly issued and are set to trade on August 1. This move allows current shareholders to cash out ahead of the typical lock-up period expiration date. Beyond Meat founder Ethan Brown does plan to unload a small amount of shares.
Optically not a good look here for a company that has enjoyed one hell of a response to being a public company to say insiders will be selling. In the market’s eyes, the read is that insiders don’t see much more short-term upside in the stock. The harsh market response should serve as a learning lesson for the Beyond Meat’s executive team that in public market world, when big material news is coming, it’s often best to give a little guidance on it.
Overall, Q2 was strong
Nevertheless, from a pure fundamental perspective Beyond Meat delivered on a host of fronts in the second quarter. One can easily argue that the company gave investors more than enough arsenal to stay optimistic longer term on the stock, even at its ultra-hot valuation levels.
“We continue to see Beyond Meat as a beat-and-raise story, one for which — at least in the near-term — fundamental momentum may matter more than valuation,” wrote JPMorgan analyst Ken Goldman in a note to clients. “With (a) short interest still hovering around 50% of the float at last measure (well above the group average of 6.8%), (b) Nielsen data getting better every week recently, and (c) 3Q likely to impress, we still view being negative on the stock as a risky proposition right now.”
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