What Happened?
Shares of plant-based protein company Beyond Meat (NASDAQ: BYND) fell 3.7% in the afternoon session after the stock reversed course following a massive, multi-day rally that appeared to be driven by a short squeeze rather than any positive company news.
The stock had surged in previous sessions despite the company facing significant challenges. A short squeeze happened when a heavily shorted stock's price went up, forcing traders who bet against it to buy shares to cover their positions, which in turn pushed the price even higher. This rally occurred even as Beyond Meat reported falling revenue, widening net losses, and negative profit margins. The company's financial health was also a concern, with reports noting shrinking sales and a high cash burn rate. The downward move suggested the buying pressure from the short squeeze was fading.
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What Is The Market Telling Us
Beyond Meat’s shares are extremely volatile and have had 70 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock dropped 6.9% on the news that analysts at Mizuho and Barclays lowered their price targets on the stock following the company's weak third-quarter financial report and poor future guidance. The plant-based meat company's results showed falling demand, with U.S. retail volumes dropping 13% and foodservice volumes declining 27%. Beyond Meat missed earnings per share estimates and issued fourth-quarter revenue guidance that was below consensus expectations. The company also recorded a significant $77 million impairment charge, a write-down that signaled diminished expectations for its long-term performance. Mizuho cut its price target to $1.00 from $1.50, and Barclays also lowered its target to $1.00.
Beyond Meat is down 64.8% since the beginning of the year, and at $1.36 per share, it is trading 72.6% below its 52-week high of $4.96 from December 2024. Investors who bought $1,000 worth of Beyond Meat’s shares 5 years ago would now be looking at an investment worth $9.80.
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