Beyond Meat: Awesome IPO or Big “Misteak”?
There are plenty of buzz-worthy IPOs hitting the market lately, and even more on the horizon…
The latest to capture traders’ collective attention? Beyond Meat, a purveyor of faux-meat products that claim to be “the future of protein.”
With mounting interest in vegetarian and vegan lifestyles, the company’s products hit it big in the mass market in a relatively short period of time and can be found in retailers and restaurants worldwide.
But is that enough to make for a successful IPO? Can Beyond Meat bring home the bacon — or is it just a flash in the pan?
Let’s explore the company, and I’ll share my thoughts on whether it warrants a spot on your watchlist.
The IPO: What We Know
The IPO date hasn’t been announced, but here’s the talk on the street…
The initial public offering will be for 8.8 million shares, with an offering price between $19 and $21 per share. This would give the company a market value of about $1.21 billion.
To put that in perspective, Beyond Meat’s reported revenue last year was $87.9 million, with a net loss of $29.9 million.
Nice to (Beyond) Meat You
What’s so great about Beyond Meat? Here are a few Beyond Meat facts that traders find appetizing:
It’s trendy. All the cool kids are going plant-based, and Beyond Meat is the ultimate accessory for the vegan in-crowd. The company’s investors include the likes of Leonardo DiCaprio, and Bill Gates (also an investor) plugged the products on his personal blog.
The company is growing. Beyond Meat products have been adopted by more and more retailers and markets since the company’s founding in 2009. While their first big customer was Whole Foods, now you can find them in all sorts of mass retailers and restaurants. Case in point: TGI Fridays now offers a branded Beyond Meat cheeseburger.
My Beef with Beyond Meat
OK, so it sure seems like Beyond Meat has a lot going for it. But this is key…
The company is not currently profitable.
Yes, Beyond Meat’s revenue has grown in recent years. But it still hasn’t turned a profit. And its losses aren’t improving much. In both 2017 and 2018, the company’s losses were about $30 million.
Sure, the IPO could help the company raise money to do things that could help them turn a profit. But I like to see cold, hard evidence, and this company doesn’t have a profitable track record … yet.
Is the Beyond Meat IPO Worth Your Time?
Some traders will rush to buy Beyond Meat stock the moment the market opens its IPO day. But is this a good idea?
Here’s the thing with IPOs: The lack of history makes it very hard to make calculated decisions about how the stock price might perform.
Sure, it’s possible that the stock will leap to incredible new highs within minutes of the market open. But then again, it could spike up briefly, then start a downward descent that just won’t let up.
Consider Blue Apron (APRN). It traded for about $10 per share at its IPO. Guess where it’s trading these days … for about $1. Bet some of those first buyers wish they waited!
Beyond Meat: The Final Word
Beyond Meat is a cool company that seems poised for growth. But my suggestion is to proceed with caution.
With any IPO, it’s generally smarter to wait a little bit before jumping in. That can give you a better opportunity to get a read on the stock’s direction.
Amateurs rush in — separate yourself from the novices by waiting for some chart action. If it’s a worthwhile stock, you’ll have your chance to get in on the trade.
Don’t let FOMO dictate your actions.
— Tim Sykes
Editor, Penny Stock Millionaires